UNITED Co-operatives has announced a strategy designed to eliminate its pension scheme deficits within ten years.
The board of the £ 1.7 billion turnover society has approved the initiative which starts with an initial £ 4.2 million injection to the funds over and above the contributions necessary to combat the deficit as advised by the schemes' actuary.
Previous additional contributions approved by directors over the last two years have amounted to £ 3 million.
United Secretary Philip Jones said: `The board has made it clear that, while the society remains profitable, its final salary pension schemes will be retained.Â To achieve this, the board has approved proposals from management for a 10-year strategy to eliminate the current scheme deficit.Â This follows on from the measures already taken including increased regular contributions.Â The board is also determined that the schemes will remain open to new employees.`
Mr Jones criticised the new Pensions Act, part of which is intended to provide a safety net for members of defined benefit (final salary) company pension schemes in the form of a new Pension Protection Fund (PPF).
He said: `The intentions of the Act are laudable, but a serious concern is the fact that the Government is now trying, by the back door, to provide funding for failed pension schemes of the recent past, which, would be paid for from the remaining defined benefit schemes still solvent.Â
`This will inevitably impact on both employee and employer contributions in the future and give some employers further reason to stop supporting defined benefit schemes.Â This is in effect retrospective legislation.`
Added Mr Jones: `There is no provision in the act to give employers any incentive to support pension provision.Â The simplification much vaunted by the Government as the reason behind this legislation, has been lost in a welter of amendments, to say nothing of ten codes of practice and 100 regulations which have yet to see the light of day.Â
`This is a sad example of the Government wasting the opportunity to make pension provision simpler and more attractive to employers and employees alike.`
Mr Jones said United will continue to lobby Government to introduce changes that encourage employers to fund final salary pension schemes and employees to join them.Â
`The future of final salary schemes hangs in the balance and the Government must take considerable responsibility for the current lack of confidence in the whole concept of pensions,` he said.