UK - Insurance giant Prudential is to close its £4.8bn final salary pension scheme to new members early next year.
But the Pru denied the closure was made to cut costs and pointed out that it would contribute 12% into its new defined contribution scheme – double the national average for an occupational DC scheme.
NAPF chairman Peter Thompson said the offer would make future members of the Prudential’s DC scheme as “well-off” as many in some defined benefit schemes.
Employee contributions into Prudential’s DC scheme will be optional, but a 6% contribution will generate the maximum employer contribution of 12%.
Prudential said final salary schemes were outdated and that defined contribution schemes were more suitable to modern career patterns.
It said: “DC schemes offer personal flexibility and control over an individual pension account, typically built up over a number of years as people move jobs.”
Prudential spokeswoman Clare Staley added: “We cannot leave an open ended commitment.”
However the decision to close the DB scheme, which is currently in surplus, has been criticised by unions.
Amicus pensions officer Bryan Freake said: “The company says it is not cutting its contributions, but that is because it had been paying a reduced level of contribution due to a partial contribution holiday and what it is paying is conditional on employees agreeing to pay an above-average member contribution.”
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