US - The multinational aluminium company Alcoa has announced it intention to scrap its existing defined benefit scheme for new US recruits, replacing it with a 401(k) defined contribution scheme.
Effective from 1 March, 2006, Alcoa will contribute at least 3% of an employee’s annual salary into the 401(k) and will match contributions of up to 6%.
The company, with a total of 131,00 employees in 43 countries, admitted the elimination of the DB plan “will limit long-term liability for the company” but said there would be no immediate impact on its profitability.
“We will continue to monitor the market place and make appropriate modifications to our benefits programs that maintain our competitiveness,” said Paul Thomas, executive VP of Alcoa.
According to Alcoa, a recent review of the pensions marketplace had indicated that 65% of employers now use a 401(k) as their primary pensions vehicle.
The company were keen to point out the pension change would not affect existing or retired employees.
An innovative funding structure has been agreed for Croydon Pension Fund. However, there are some concerns about the arrangement. Stephanie Baxter reports
Some 52% of red flags raised by schemes on suspected scam pension transfers involve advisers or unregulated introducers, a report by the Pension Scams Industry Group (PSIG) has claimed.
The Norfolk Pension Fund has been successful as the lead plaintiff in a class action case that went to jury trial in California involving securities fraud.
In this week's Pensions Buzz, we want to know whether bosses should have to pay into the same staff DB scheme as their workers rather than their own executive pension fund.