Barclays plans to replace defined benefits pension scheme

Barclays
has announced that it is launching a new occupational pension scheme for the
24,000 staff that are currently members of its defined contribution scheme
(money purchase) and for all new people joining the company.

Called
‘Afterwork’, the scheme has two elements: the core credit account and a
voluntary investment account.

Stuart
Stephen, pensions director at Barclays plc, said: “We believe our new pension
bucks recent trends as it takes away some of the investment risk our employees
have been facing as members of our defined contribution scheme.

“It
is designed to cut through the current uncertainty about poor investment
performance by guaranteeing staff part of their pension pot, and offering them
a more predictable pension when they reach retirement.”

To
become a member of the new scheme, employees will have to make a contribution
of 3 per cent of their basic salary. In return for this contribution, Barclays
guarantees that an amount equivalent to 20 per cent of the basic salary they
earn in each year of their employment will be made available to them at age 60
to buy retirement benefits.

The
credit account is guaranteed not to fall in value and it may go up to reflect
inflation and investment performance to help protect the value of the benefit.

In
addition, employees can contribute to the investment account. Barclays will
match employee contributions up to a maximum of 3 per cent of the employee’s
basic salary. The contributions will then be invested in funds selected by the
employee. This element of the pension is not guaranteed.

At
retirement, money from both the elements of the scheme will be made available
for the member to purchase retirement benefits.

The
new scheme will come into effect for new staff members on 1 October 2003 and
all existing members of the defined contribution scheme will move across to the
new pension on 1 January 2004.

The
changes will not affect current pensioners or the 39,000 members of its final
salary pension scheme.

By Ben Willmott

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