Barclays closes final salary pension scheme
Barclays has announced that it will water down its staff retirement benefits scheme in the next few months according to pension experts. This comes in the light of the bank announcing plans to scrap final salary pensions for its long serving staff of 18,000.
Staff members who joined before 1997 will not be able to add future benefits in the defined benefit scheme and will only be offered the chance to participate in a “hybrid” scheme or a defined contribution scheme with any existing pension promises already earned allowed to be continued through to final payment. The Barclay pension fund deficit is already in excess of £2.2 billion and the board has decided to close the scheme.
Staff will be given the opportunity to participate in an American style credit account scheme whereby they put 3% of their salary in a fund that will accrue 20% of total pay in an inflation adjusted lump sum which will be used to buy an annuity in retirement. Barclays will implement the new arrangement from December 2009 once consultation has taken place. The majority of staff, 39,000, joined the bank recently and are already in the hybrid scheme.
Most private employers have already closed defined benefit schemes to new staff members but few have decided to close the option off to existing staff members. Many large organisations have seen their pension fund deficits climb to an enormous high due to falling investment returns and longer life expectancy.
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