UK roundup: West Sussex, Coca-Cola, Ernst & Young, Tax relief
UK - West Sussex County Council is seeking a transition manager for its local government pension scheme, while trade unions are threatening Coca-Cola with strike action over changes to the final salary pension scheme.
Elsewhere, Ernst & Young has been fined £500,000 for failings in relation to the audits of Equitable Life Assurance Society, and PricewaterhouseCoopers (PwC) has warned the UK government of the potential consequences of continuing with plans to reduce higher rate pension tax relief ahead of next week's emergency Budget.
Currently, the pension fund has £1.4bn of its assets invested in two balanced equity and bond mandates run by UBS and Baillie Gifford, with the remainder allocated to private equity, property and cash. (See earlier IPE article: West Sussex reappoints UBS to multi-asset role)
The closing date for tender submissions is 3 July 2010, and further information can be obtained from West Sussex Council.
The unions said CCE management had refused to consult or negotiate on major changes to key conditions of employment, including the decision to raise the retirement age for the pension scheme to 65, or allow retirement at the existing age of 60 in return for a reduction in pension of up to 25%.
Alan Costello, GMB regional officer for members in Coca-Cola, said: "GMB members do not consider that the extent of the cuts CCE made to its pension scheme are justified, particularly in the UK, where earlier this year it became the first ever brand to break through the £1bn sales barrier."
A Coca-Cola Enterprises spokesperson said: "Changes to our DB pension scheme followed a full consultation process directly with our employees and employee representatives.
"We informed the unions at the start of that process and listened to their feedback throughout.
"The DB pension scheme will remain in place. It will now be more sustainable for the future and remains a very competitive and positive benefit for employees who are members."Ernst & Young has been fined £500,000 and ordered to pay £2.4m in costs by the appeal tribunal of the Accountants' Joint Disciplinary Scheme, a reduction of almost 90% from the original figures imposed by the Joint Disciplinary Tribunal (JDT) in June 2009.
The Appeal Tribunal overturned a finding from the JDT report that E&Y acted with a "lack of objectivity and independence".
This allowed for the reduction of the fine from £4.2m to £500,000, while costs were also more than halved from £5.75m to £2.4m.
However, the Tribunal did uphold other criticisms from the report relating to the lack of information in certain financial statements.
In a statement, E&Y said: "In terms of the adverse findings of the JDT: these were matters of complex professional judgment in a difficult and novel area in which there was no direct technical or professional guidance at the time.
"It is therefore frustrating the JDT did not agree our judgements were reasonable, particularly given the level of provision in the Society's accounts for 1999 has since been supported by others.
"We regard these matters - a decade on - as now closed."PwC has warned the government that plans to taper and eventually remove higher rate pension tax relief could jeopardise pensions provision for all employees, according to results from a survey of 179 employers.
Findings showed 70% of respondents believe reducing tax relief will result in lower pensions for the wider UK workforce, while 74% are concerned about the administration burden of a new tax regime.
Instead, 70% of employers would prefer the government to raise the same amount of money by reducing the employee's annual allowance for pensions.
Marc Hommel, pensions partner at PwC, said: "UK employers have signalled the higher earners tax will definitely result in them lowering pensions provision across their wider workforce.
"The government should be cautious about clawing back tax-relief further to help plug short-term UK debt, given this could exacerbate the long-term socioeconomic challenges of an ageing population retiring with insufficient savings."