UK - Employers who are "hell bent on closing final salary schemes" will run roughshod over proposals forcing them to consult with employees, the PMI warns.
The Green Paper consultation proposal – which was sponsored by a number of the major trade unions – is designed to make it harder for companies to close their final salary schemes without discussing it first with employees.
But PMI president Ian Eggleden is not convinced this will be effective.He explained: “Consultation is a good practice in any situation.
“But it does not necessarily mean employers will take any notice of what they hear.”
Lawyers, though, say that even if employers effectively bypass any future legislation, it will still cause companies an extra administrative headache.
Hammonds solicitor Fiona James said: “A prescriptive process for consultation is likely to merely add to the administrative burden the government says it intends to reduce.”
She added that forcing employers to consult with members over scheme changes connected with confidential business transactions will simply be unworkable in practice.
And she pointed out that in certain instances, Stock Exchange rules might prohibit such consultation with members altogether.
Amicus AEEU pensions officer Julian Richards – one of those who called for the proposal – thought there was a good chance that consultation on pensions stood a good chance of being made law.
He said: “The government realises there is an issue that employers have too much power in how they can unilaterally change schemes, often at very short notice.
He foresaw only a few employers opposing the proposal that would give pensions the same statutory protection given to pay and holidays.
“There are a number of employers who do genuinely come to us and say ‘look, we have a problem with our scheme, we need to reduce costs or cap liabilities’. Those employers will have no problem with this legislation.
“The problem is with a number of employers who simply say on a Monday morning that they are closing the scheme on Friday.”
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