GERMANY - Pharmaceutical giant Bayer has attributed its e1.1bn pension obligation to a sustained period of low interest rates and new accounting standards.
In its third quarter report, the company said IAS19 had led to a e1.1bn increase in pension obligations as at end of September.
“The increase was due especially to a considerable drop in long-term interest rates in the principal countries,” the report stated.
A spokesperson for Bayer also said the firm had reorganised its pension plans around the world particularly in Germany and the US from 30 January 2005.
Regarding Germany, Bayer said all employees joining after this date were insured with the Rhienische Pensionskasse. Employees who joined Bayer prior to January remain insured with the Bayer Pensionskasse, a defined benefit system.
In a statement, the company said: “The Rheinische Pensionskasse operates on the same basic principles as life insurance. encouraging employees to take responsibility for safeguarding their overall retirement incomes.”
The new pension scheme allows employees and the company to make equal contributions to finance the basic pension, which is based on a guaranteed interest rate of 2.75% plus any distributed surplus.
The British Medical Association (BMA) has warned chancellor Philip Hammond to reform the NHS pension scheme rules or doctors will reduce their working hours.
The lifetime allowance should be scrapped and replaced with a lower annual allowance, last week's Pensions Buzz respondents said.
Action for Children Pension Fund has outsourced its pensions administration to Trafalgar House.