UK - The £3.65bn Diageo Pension Scheme has successfully opened up its defined benefit plan to temporary, casual and fixed-term employees.
The changes - which were implemented late last year - work by letting temporary, casual and fixed-term employees join the pension scheme at the end of the month in which they start at the company.
The scheme has no vesting period so the short-term employees are entitled to a deferred pension as soon as they leave the company. Or there is the alternative of a refund of contributions or the transfer value.
All Diageo’s short-term employees are offered the same benefits as full-time employees.
UK pension manager Graeme Robertson said: “We had the alternative to either widen the scheme eligibility to suck these extra people in or to introduce a stakeholder pension plan for them.
“But we actually thought that it would be difficult to explain to potential members of our scheme the difference between stakeholder and final salary and that we couldn’t advise them which was best.
“So it seemed more beneficial to open the scheme to these people and invite them in if they wish to do so.”
Robertson added that the drinks giant did not expect take-up to be particularly high and that so far this had proven the case with fixed-term employees being the most likely group to sign up.
But he said that by taking the move, Diageo had put itself in a position to avoid any potential impact from forthcoming European legislation that will make it illegal to offer different benefits to temporary workers.
Gissings director of corporate affairs Rodney Jagelman commented: “Diageo has taken the view that the number is up as far as discrimination is concerned and are extending the eligibility of the scheme. This eliminates what appears to be discrimination between permanent employees and others.”
By Paul Sanderson
Fidelity International has created global retirement savings guidelines to help employers and employees understand how much is needed to save for retirement, writes Kim Kaveh.
The Local Authority Pension Fund Forum (LAPFF) has announced the sudden death of its chairman, Ian Greenwood, on Monday (12 November) night at age 68.
Jonathan Stapleton wonders whether we need a thorough review of the principles for institutional investment decision-making