A UK pharmacists union plans to complain about the removal of unreduced pension options as a result of a buy-in transaction between Boots and Legal & General (L&G).
At the end of November, Boots Pension Scheme completed a £4.7bn buy-in deal with L&G securing benefits of all 53,000 retirees and deferred members.
As part of the transaction Boots brought forward approximately £170m of already committed payments to the scheme and has committed to pay extra contributions expected to be approximately £500m.
However, the transaction also included the removal of the option to take a full pension from age 60, which scheme members are planning to complain about.
Paul Moloney, an union national officer for the Pharmacists’ Defence Association (PDA), said: “We have considered, with our advisors, the claim by the trustees of the scheme that the option to take an unreduced pension from 60 was discretionary and not a right and believe there is insufficient evidence to fully support this claim.”
Moloney said that the union is therefore questioning whether this option should have been secured as part of the buy-in deal and not ended with immediate effect.
He continued: “Instead, we believe benefit statements issued to members, at the very least are contradictory, and clearly state that a full pension will be payable from a member’s 60th birthday, with no reference to this benefit being discretionary and therefore subject to a regular review by the trustees. Instead, the benefit statements give the impression that an unreduced pension from 60 is a right with no indication that retirement plans should not be based on the benefit statements.”
Moloney recognised the advantages a buy-in can bring to the overall security of benefits, adding that it is important that it is done correctly.
“We believe there is sufficient doubt over the claim that the unreduced pension was discretionary and can be ended with the buy in,” he said, adding that members can challenge this through the scheme’s dispute procedure initially and if unresolved through the Pensions Ombudsman.
PDA held an online meeting of more than 100 members affected and will now be sending template complaint letters setting out concerns regarding the discretionary nature of the benefit and the way it has been communicated to scheme members over the years.
The templates are for PDA members to complete and will act as the first stage of a formal complaint.
An L&G spokesperson said that changes to the discretionary benefits are a decision made by the trustee of the pension scheme, having consulted with Boots and after taking the relevant professional advice.
Boots and Boots trustees have been approached by IPE for comment.
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