UK - British employers should resist pressure to close final salary schemes to existing employees, says the Chartered Institute of Personnel Development (CIPD), in London, which has 110,000 members among personnel people.
But it recognises that offering these schemes to new entrants may not be possible. “We know that employers can’t support open-ended obligations influenced by factors outside their control,” says Mike Emmot of CIPD. “Changes to tax and accounting requirements, as well as declining stockmarket returns have delivered a body blow to the affordability of the traditional pensions scheme.”
The institute has joined the growing number of those calling for changes to the new accounting standards FRS17, which will mean pension fund deficits being transferred to the sponsoring group’s balance sheet. Over the weekend, pensions minister Alistair Darling said in a BBC interview that he had discussed FRS17 with its proponents the Accountancy Standards Board, who are to consider how it varies from the international standards for pensions accounting. These were less volatile in their effects, the minister claimed.
The CIPD also called on the government to look urgently at relieving the burdens on pension funds by “re-instating the advanced corporation tax (ACT) relief and by ensuring that funding and reporting calculations are taken over a longer period”. The institute referred to the development of occupational pensions as one of the real successes of post-war Britain.