UK - A trade union has attacked the FSA over plans to give staff in its money purchase scheme bigger pay rises than its final salary workers.
The FSA set out the two-tier pay deal in a memo to employees. Under the FSA’s proposals, staff in its final salary scheme were told to expect pay increases of about 4.2% while those in the DC plan stand to get 6.7%.
Director of communications at financial services union Unifi, Dai Davies, described the FSA’s actions as “outrageous” and accused the regulator for promoting a “two-tier workforce”.
The FSA closed its £153m final salary pension scheme, which has a £31m deficit, to new members in 1998.
Davies claimed the regulator had been looking to cut costs ever since.
But an FSA spokesman defended the move and pointed out that staff in the final salary scheme had the benefit of an assured pension, while employees in the money purchase scheme would have to depend on the performance of their investments.
He also pointed out that many of the members of the money purchase scheme had only been working for the FSA since 1998 and were generally lower paid workers.
Society of Pensions Consultants president Donald Duval said it was a “positive trend” to see the value of pension schemes being explicitly reflected in pay negotiations.
But he said the FSA was in a unique position because its final salary scheme was government-backed and offered a “very high degree of security”.
He added: “The value of a DB pension scheme depends not merely on the benefits being promised, but how secure it is.”
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