UK – Scottish Power and labour unions are currently in talks about proposals to re-open one of its final salary schemes to long-serving employees.
A spokesperson for the utility firm told IPE that the move would give long-term staff who join from 1 April 2006 the opportunity to move from a defined contribution scheme to a final salary scheme after 10 or fifteen years.
The spokesperson stated that the talks between Scottish Power and unions were “ongoing” and “positive”.
The disclosure follows suggestions earlier this month from Institute of Actuaries president Michael Pomery that the shift from DB to DC may be a cyclical trend that could be reversed.
In January, Scottish Power announced plans to close its £2.4bn (€3.5bn) final salary scheme to new members, and increase employee contribution rates by 2% over four years at 0.5% per year.
A staff report stated: “Like the schemes of all big companies, Scottish Power’s is under increasing funding pressure as people live longer and investment returns slow.”
The energy giant stated it would maintain final salary pensions for its current 7,600 staff, and proposed the introduction of a money purchase scheme for new employees from April.
According to reports, Scottish Power’s pension trustee chair Stephen Dunn told a Confederation of British Industry pensions seminar last week that the scheme will “not be doing a Rentokil”, but focus on providing good pensions for its staff.
The sale of Scottish Power’s US subsidiary PacifiCorp would also be used to help plug the current scheme deficit pegged at a “relatively modest” £150m.
In December, pest-control firm Rentokil decided to close its final salary defined benefit pension scheme and cut equities exposure in a bid to address its £325m deficit.