UK - Logistics and shipping company Exel is set to close its two final salary schemes to new members, despite both being in surplus.
Exel’s annual report from March shows the scheme’s had a combined FRS17 surplus of £491m – and the company’s half year results, released earlier this week, show that both funds remain in surplus.
An Exel spokesman explained that it wanted to close its two funds to manage risk in light of falling investment returns. The company’s main £1.62bn fund is about 72% invested in equities, according to latest figures.
Mercer Human Resource Consulting European partner Matthew Demwell said: “Regardless of their profitability, employers are looking at the cost of providing pensions. The kind of pension that’s right for a particular company and its employees is independent of how well that company is doing.”
The half year results also reveal that its profits rose 15% to £89.3m.Demwell added: “Employers have to make sure they are in touch with their employees and what the markets are doing. If you find you’re the only employer offering DB for new hires, you’re out of line with the market.”
Under the planned closure new employees at Exel will have to join a defined contribution scheme, the full details of which are being discussed by scheme trustees and Exel.
Mercer Investment Consulting is advising the scheme.
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