Barclays to close final-salary pension scheme

by Gill Montia

Story link: Barclays to close final-salary pension scheme

Barclays has announced plans to close its UK final-salary pension scheme to existing employees, in a move that will affect around 18,000 staff.

According to the bank, the majority of its employees already belong to a money purchase scheme and staff in the final-salary scheme would be moved across.

Trade union, Unite, is opposing the change but Barclays is arguing that managing costs is a “top priority” in the current economic climate.

In January, the National Association of Pension Funds published research showing that one-quarter of the UK’s leading private sector companies expect to close their final-salary pension schemes to existing members in the next few years.

The cost of the schemes has meant that many have already been closed to new members but generally, current contributors have been allowed to continue to accrue entitlements.

However, the investments behind the pension funds have been devalued by plummeting values of shares and assets in the credit crisis.

In addition, scheme costs are rising as retirees live longer.

In related news, the UK Pensions Regulator recently warned companies that they must put the health of their pension funds before shareholders’ dividends.

In a letter to employers the watchdog stated: “There is no reason why a pension scheme deficit should push an otherwise viable employer into insolvency … but the pension recovery plan should not suffer, for example, in order to enable companies to continue paying dividends to shareholders.”