UK - Kraft, the new owner of chocolate manufacturer Cadbury, is attempting to woo staff away from the final salary pension fund and into a career average scheme by warning those who do not move could face a three-year pay freeze.
A clause in the Cadbury pension fund means any shift to close the scheme to future accrual would effectively require the company to pay near-full price of the pension liabilities to an insurer should they take it on. The scheme itself closed to new members in 2001.
The pension fund completed a £500m buy-in on some of its pensioner members last December but the £2.2bn scheme is still carrying a deficit on its liabilities which makes it unaffordable long-term, according to a spokesman for Kraft. (See earlier IPE story: Cadbury completes £500m buy-in with PIC)
What it materially means is we are proposing to move people away from the current final salary plan to a career average scheme, but it cannot be done in a compulsory manner. What we are trying to do is incentivise them to move to the career average scheme because ultimately we have to make sure the pension schemes are affordable," said the spokesman.
The Kraft representative argued Cadbury has been leading the consultation about the shift towards a career average scheme, following its PIC buy-in last year.
All members will receive further correspondence about the future of their pension arrangements over the next week and "targeted individual communications" will then be issue to ensure all members are aware of their financial positions, continued the spokesman.
A triennial review of the pension fund is currently under way so a clearer picture of the pension scheme's status should be available by the end of the year.
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