UK - Government plans to scrap vesting periods could be the "nail in the coffin" for final salary schemes, employers warn.
The Confederation of British Industry says ditching vesting periods – the time between joining a scheme and becoming eligible for deferred benefits – will create an administrative nightmare for providers and could prompt further final salary scheme closures.
Work and pensions secretary Andrew Smith said: “It remains our intention to introduce, as government amendments, measures such as the immediate vesting for short-term workers.”
The Confederation of British Industry said it had “great concerns” about the measure being introduced on an immediate basis.
A spokesman said: “We have great concerns about the reduction in vesting periods because of the administration burden it places on employers with high levels of staff turnover.
“You could find companies – particularly those in the retail sector – having to administer large amounts of very small pensions. It will do nothing to encourage future occupational pension provision.”
Mercer Human Resources Consulting European partner Matthew Demwell agreed and said: “Having it immediate is a pain because you could have people employed for a few days who walk out yet are eligible for a deferred pension.”
This week's top stories included Cardano announcing plans to acquire Now Pensions from a Dutch pension fund later this year.
Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.
Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point