UK - The multi-billion pound Consignia and ICI pension schemes are taking unprecedented steps to insist they are not in crisis despite funding shortfalls.
The National Association of Pension Funds has attacked national press attention on the two schemes for concentrating on headline figures while ignoring the small percentages of the shortfalls.
The main focus of coverage has been Consignia - formerly the Post Office - where the £18bn fund could face an £800m shortfall caused by planned cutbacks of 30,000 staff. A report written by accountant Arthur Andersen and commissioned by Post Office regulator PostComm examines the likely impact of Consignia’s planned £1.2bn cost-saving programme which aims to cut the group’s losses by the end of the 2002-03.
Andersen concludes that depending on the age profile of the redundancies, the hole in the pension fund in a worst case scenario could be as high as £800m, although it assumes a probable figure of £600m.
However, a Consignia spokesman claimed that as the company had a regular turnover of 20,000 staff a year, the loss of 30,000 employees would not dramatically hit its pension fund and that it would honour any shortfall.
At present the non-active and larger of Consignia’s two pension funds has a 106% surplus, while the smaller active fund has a 5% deficit.
The £7bn ICI Pension Fund has also come under scrutiny over a reported £160m shortfall. ICI communications manager Regina Kilfoyle said the shortfall was “not an issue” as the profit-making chemicals giant was committed to making top-up payments to its scheme.
Kilfoyle pointed out that ICI had made payments of £120m in 2000 and £30m last year to raise the scheme up from the 98% funding level reported in its last triennial review two years ago.
NAPF director of benefits David Astley criticised the press attention on the two schemes as concentrating on the large cash figures in question, but ignoring the small percentages of the shortfalls. He said: “A slight shortfall in a fund is not a crisis. It will give an employer cause for concern, but it is not a crisis.”
By David Rowley
Jonathan Stapleton asks whether newly-accredited professional trustees should be a statutory fixture on pension scheme boards.
Savers are being warned by the Insolvency Service to guard their pension pots from investment scammers and negligent trustees as it winds up 24 companies.
Respondents say they should only be required in certain situations as the system is not broken.