UK - Fujitsu Services UK has confirmed it is initiating a three-month consultation with staff and trade unions over the closure of its defined benefit (DB) scheme to future accrual.
Unite, the union, said around 4,000 Fujitsu employees who are members of the scheme have received letters from the company informing them of the proposal to close the pension scheme.
Fujitsu Services confirmed a 90-day consultation with staff and Unite begins today over proposals to close the UK DB scheme to future accruals, and added while "this action is regretted it is a prudent step to enable us to manage the pension risk".
But Peter Skyte, national officer at Unite, criticised the planned closure as he claimed Fujitsu Services is a "highly profitable company" having produced a profit of around £177m in the last financial year.
He added: "The company has yet to produce any proper justification for this latest attempt to raise profits by cutting pension benefits, and this action may hinder future bids for blue-chip private sector outsourcing contracts. We will be mounting a robust campaign to persuade the company to think again."
The latest Fujitsu Services annual report for 2008 revealed around a third of the group's UK employees are a member of the DB scheme, which closed to new members in August 2000, making it "significantly larger than all the other arrangements put together".
Figures showed at 31 March 2008 the DB schemes operated by Fujitsu had assets of £2.2bn (€2.5bn) and liabilities of £2.5bn resulting in a deficit of £324.2m, although this was an improvement on the 2007 deficit of £509.3m following a rise in bond yields.
Punter Southall, the consulting firm, suggested the proposed change to the Fujitsu Services scheme could mark the beginning of another wave of scheme closures, as Simon Banks, principal at Punter Southall, claimed: "We know many other companies are considering similar action, and some are in advanced discussions with trustees."
He pointed out the market turbulence over the last year has highlighted the volatility exposure in the pension scheme, and at the same time many employers are being "squeezed for cash" or having difficulty meeting previous recovery plan agreements.
"In such situations, the funding regime introduced in 2005 steers employers and trustees towards closure to future accrual and using the savings to address the deficit," warned Banks. "This approach means trustees are placed in a difficult position, balancing the future benefits of members against the security of the benefits already promised."
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