US - Fidelity Investments is closing its traditional pension plan to ‘address the evolving and changing needs its employees will face in retirement'.
The company has taken the decision to cut off the scheme after an internal survey showed that over 70% of employees did not know how they would pay for healthcare in their retirement. The company will now offer a 401(k) plan with a new health savings credit for its employees.
Under the Retiree Health Reimbursement plan, the company will contribute $3,000 annually to each full-time employee's account.
A Fidelity spokeswoman said there would be "immediate vesting of the current pensions plan for all active employees, including a lump sum payout of all accrued pensions benefits earned, which can be either received in the form of an annual annuity payment or rolled over into employee’s profit sharing plan".
She added: “While the profit sharing plan has been the cornerstone of our retirement savings plan historically, we know that many other companies will continue to offer pension plans. We believe defined benefit (DB) plans are outstanding retirement vehicles for many. The plan we are going forward with is to address a gap in our existing retirement savings plan for our employees.”
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers