Aegon moves to halt DB scheme future accrual
UK - Aegon is to close its defined benefit pension scheme to future accrual in March 2013 as part of its restructure and cost saving programme.
The life and pensions firm also plans to remove the link to final salary for calculating pension entitlement from that date. The scheme has been closed to new members since 2003.
The Edinburgh-based firm said it will begin a 60-day consultation with its employees, and representing unions Aegis and Unite, on 14 November.
The company decided it was no longer "commercially sustainable" to keep the scheme open to future benefit accrual and maintain the link to final salary for calculating pension.
UK chief executive Adrian Grace said: "The financial risks in running a defined benefit scheme are becoming ever greater and there is a growing trend for employers to move from DB to defined contribution pension arrangements. It's no longer commercially sustainable to keep our scheme open to future accrual and maintain the link to final salary.
"Running two different pension schemes also means we're not rewarding employees on an equal basis, and we want to address this. Our aim is to move to pension provision that rewards our staff on an equitable basis and is sustainable for the future."
Workers will be offered membership of the company's group personal pension in place of the DB offering from 1 April 2013. Currently more than half of Aegon UK employees are members of the GPP.
It is also proposing a change to the current GPP scheme from 1 April next year which will mean employer pension contributions are calculated using basic salary only, rather than salary plus fluctuating earnings such as bonuses and overtime.
Aegon said this will make employer pension contributions more affordable and predictable in future, ensure its employee pension provision is sustainable for the longer term and "bring it more in line with its competitors".
It added it would support the DB scheme in regards to all benefits already built up and the changes would not affect deferred or retired members.
Aegis general secretary Brian Linn slammed the announcement.
He said: "This is a devastating attack on the people who have loyally supported AEGON UK through a turbulent year as the company restructures to meet the demands of its Dutch shareholder. For a pension provider to inflict a blow like this on its own people has shocked everyone to the core.
"We do not accept that these proposals will 'reward all employees on an equitable basis', as the company claim. The reality is they will dramatically reduce the pension provision for every single member of staff.
"We are utterly opposed to these proposals and will consider all options available to us in the fight to save our members' pensions."
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