UK - Warwick University, Bangor University and Lloyds Banking Group are the latest organisations to announce changes to their final salary pension schemes, in a bid to make them more sustainable.The University of Warwick is involved in two pension schemes, the national Universities Superannuation Scheme (USS) and the separate University of Warwick pension scheme that caters for non-academic staff.
A spokesman for the university said the Warwick pension fund had faced similar challenges to other DB schemes in the last year, including stock market volatility and increasing longevity. This had led to the trustees contacting the 1,500 members to inform them of a £45m (€50m) deficit in the scheme.
This is an increase from a deficit of £12.2m at the end of July 2008 when the scheme was valued at £96m. Warwick told IPE it was concerned that all staff should have access to a sustainable pension scheme, so it had considered a number of options and had now proposed amendments to the pension fund.
The changes are split into two parts with the DB scheme closing to new entrants from 1 April 2010, while the DB scheme is retained for existing members but with "some modifications". It added the proposals would now be open for consultation until the start of February.
The company said employees are currently either members of one of two 'heritage' Lloyds TSB schemes or a heritage HBOS scheme, and there are approximately 56,000 employees in Lloyds final salary schemes and 54,000 in a Lloyds defined contribution (DC) scheme.
It is proposing the establishment of a new DC scheme for new entrants in April 2010, with all members of the existing DC schemes moving to the more generous arrangement in 2011. This will have a default employee contribution of 3% and a company contribution of 8%.
The group, which has launched a 60-day consultation period on the plans, also intends to retain its DB schemes for existing members, but with pensionable salary capped at 2% per year or at RPI (whichever is lower) "to ensure long-term sustainability".
A spokeswoman for the university stated: "The financial difficulties facing pension schemes is widely known, and Bangor University's pension scheme faces pressures similar to many others. It is important to note that this is only a consultation at this stage, and that no final decision has been made."
In addition, the university added it is prepared to "review any aspect of the original proposal including removing the change to the accrual rate, and is also looking constructively at alternative plans put forward by the trades unions".
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