Thousands more face crisis over pensions
• Arcadia group announces changes to current final-salary pension
• Chain employs 3,600 in Top Shop, Burton and Dorothy Perkins
• Pension bodies view move as appropriate solution to mounting pension crisis
"It is a good example, given the straitened circumstances employers find themselves in, of finding ways to manage the costs [of final-salary schemes]. People may decide they are better off with having an alternative pension scheme and a job rather than no job and no pension scheme." - SPOKESPERSON, NAPF
Story in full THE retirement plans of thousands of Britons were dealt a major blow last night when they were told they would have to work longer or have their company pensions cut.
Philip Green - who, with his wife, got a 1.2 billion dividend last year as the main shareholders in the Arcadia clothing group - has told his 3,600 staff they will have to work five years longer and pay more in contributions if they want to maintain their current final-salary pension. The chain includes the Top Shop, Burton and Dorothy Perkins brands.
In another blow, the Co- operative Society has told almost 22,000 staff it is cancelling their final-salary pension and replacing it with a less generous scheme.
The moves come just weeks after the FTSE 100 listed company Rentokil sparked controversy when it closed its final-salary pension scheme to current employees.
Unions fear the latest moves are just the tip of the iceberg, with FTSE 100 companies estimated to have a collective deficit of about 40 billion in their final-salary schemes.
John Hannett, the general-secretary of the USDAW union, which represents staff at Burton, said: "We've written to the company expressing the deep concerns of our members. We want to find out exactly why these changes are justified when the Arcadia pension fund seems to be relatively healthy."
A key worry is that the huge dividend paid to Mr Green may have put the company in line for a higher risk-based levy for the new Pension Protection Fund. One insider said last night: "Many Arcadia staff are bound to see this as badly-timed. Mr Green's dividend now looks a bit more complicated than it did, and we have employees being asked to work longer and pay more while the boss is getting a major payout."
Mr Green said there had been strong ongoing discussions with the Arcadia pension fund's trustees to find a solution to long-term final-salary pension schemes.
He added that there was no compulsion to increase employee contributions from 4 to 6 per cent, or to work an extra five years. "They can still retire at 60," he said.
Mr Green admitted that a worker's pension would go down if he or she decided to stick with their current payments, but employers would get more if they paid the new amount. "It comes down to perhaps an extra 15 net a month [employee contribution], net of tax benefits," he said.
Meanwhile, the Co-operative Society said it was replacing its final-salary pension scheme with one which would pay out based on a worker's average salary. The move will affect 21,800 employees.
USDAW hit out at the move. It said: "This decision that will leave most of their staff worse off is at odds with the traditions of the Co-operative movement and their much vaunted ethical trading policy."
Britain's private sector employees are already reeling from proposals put forward by the government's own pension commission, which said the state pension age must rise over the next half century, perhaps to 66 in 2020, 67 in 2030 and 68 in 2050.
Public-sector workers have been told by the government they can still retire at 60.
The National Association of Pension Funds (NAPF) appeared broadly sympathetic to Mr Green's move.
A spokesman said: "It is a good example, given the straitened circumstances employers find themselves in, of finding ways to manage the costs [of final-salary schemes].
"People may decide they are better off with having an alternative pension scheme and a job rather than no job and no pension scheme."
David Laws, the Lib Dems' work and pensions spokesman, said: "Action to make pensions affordable is inevitable, but it is vital that this should respect existing entitlements and that top managers and owners should also demonstrate that they are accepting their share of the pain."
Search for a job
Search for a car
Search for a house
Weather for Edinburgh
Monday 20 May 2013
Temperature: 8 C to 21 C
Wind Speed: 8 mph
Wind direction: North west
Temperature: 7 C to 17 C
Wind Speed: 10 mph
Wind direction: North west