Scottish Widows closes final salary scheme
UK- Scottish Widows, life assurance arm of Lloyds TSB, has become the second UK insurer to announce the closure of its final salary scheme to new employees.
To bring pensions arrangements in line with those of the Lloyds TSB Group, Scottish Widows will be introducing a money purchase arrangement plan as of 1 January 2003 where the benefits for each member will depend on the amount invested by both the individual and the company, and on the investment performance.
Amicus, the UK’s largest private sector union, and vocal opponent of defined contribution schemes, has criticised Scottish Widows, and has requested a meeting to discuss the finer details of the plan to replace the scheme.
Says a spokesman for Amicus: “we will need to know who the funds will be invested with, what the projected returns will be – basically we need to gauge how good or bad the replacement scheme is.
“Defined contribution schemes tend to give lower pensions that defined benefit schemes. The risk is passed on from the big corporate scheme to the individual, which is not acceptable. We will hear Scottish Widows proposals, take stock and decide where to go. If the DC scheme offers the same benefits to employees, then we will not have to act.”
Scottish Widows follows in the footsteps of UK life assurer Prudential, which announced at the end of September that it would close its DB scheme to new employees. Amicus described the move as “shameful”, and Roger Lyons, joint general secretary at the union, stated that unless talks were held between the two parties then a strike would be discussed.