Pension provisions thrown under spotlight

Wednesday, December 21, 2005

The need for a dependable pension scheme and sufficient retirement savings has been highlighted by the news that Rentokil Initial has cut its final salary pension scheme.

This is Money reports that as the first FTSE 100 company to take such action over its pension scheme, Rentokil Initial could be setting a precedent for others to follow.

BT, BAE Systems, Lloyds TSB, Royal Bank of Scotland and Unilever all have pension deficits of over £2.8 billion according to the finance website, meaning that those pension schemes could be the next to suffer.

"Rentokil is the first trickle from the dam. The rest will follow. When push comes to shove, it is a question of, 'Do you want your job or your pension?'," said Tom McPhail, head of pensions at Hargreaves Lansdown to This is Money.

Aging workforces are making it less financially viable for companies to persist with final salary pension schemes, where the retiring employee receives a percentage of their salary during retirement.

This means that if other companies do follow suit, many employees could be left with insufficient pension funds when they retire.

Need to know more about pensions? Click here:
http://www.europinions-finance.co.uk/pensions/pensions/
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