The Pensions Forum (UNITE and IPMC) continues to press the company for a meeting to sort out how the company will implement the commitment secured by UNITE at ACAS that the terms of the Defined Contribution schemes (particularly FJUK) would be made contractual.
Many members have been raising concerns about the government announcement that it intends to link increases in Defined Benefit pensions in deferment or payment to the Consumer Price Index (CPI) rather than the Retail Price Index (RPI). As TUC General Secretary Brendan Barber explained to Pensions Age
“Over someone’s whole retirement this will add up to a significant loss. CPI is less than RPI in most years because it excludes housing and council tax costs. But even if all other things are equal CPI is on average half a per cent less than RPI because it is calculated in a different way. If pensions in payment today had been linked to CPI instead of RPI for the last twenty years they would now be 14 per cent lower. This is a stealth cut on the pensions of middle income Britain.”
Professional Pensions reports a KPMG survey which estimates that this would reduce private sector pension deficits by around £45-100bn. This isn’t some clever trick, the reduction in deficits is by reducing pensions.
Closure of a Defined Benefit pension scheme means your accrued pension is index linked rather than linked to your final salary when you retire, so closure could mean members being exposed to the consequences of the government’s attack on pensions for many more years than would otherwise be the case – increasing the detriment of closure. For schemes affected by the change, the reduction in deficit could also undermine the case for closure.
The Pensions Forum is seeking clarification from the company of any impact of the government’s announcement on members of the ICL DB plan.
The minutes of the last Pensions Forum meeting on 7th May 2010 have now been published on the IPMC CafeVIK community.
One of the pensioner representatives on the IPMC has written some comments about the latest situation for those with AVCs in Equitable Life, which are on the ICL Group Pensioner’s web site. He suggests that if you were one of the part-time workers who were excluded from the pension scheme and then became a full member of Equitable Life (ELAS), it is particularly important that you keep an eye on the situation, as the ICL Pension Plan cannot act on your behalf in seeking compensation. Equitable Members Action Group (EMAG) is a useful source of information.