Final salary pension abolition ‘will damage trust’ warns CIPD

final salary pension schemes for employees who are already building up
entitlements under them could seriously damage the ‘psychological contract’
between employers and workers, claims the CIPD.

employee relations adviser Mike Emmott warns that: "Where businesses fail
to meet expectations about pensions, they risk damaging the trust between
employer and employee. This is likely to adversely affect motivation and
productivity, as employees feel that their employer no longer feels the same
level of commitment to them. This will be reinforced if the employer also
reduces its financial contribution to the scheme."

was responding to evidence that some large companies are replacing final salary
pension arrangements for current staff. He thinks they should consider the
positive impact of final salary schemes on retention of staff and the effect on
the bottom line of losing key people. 

added: "Final salary schemes will not be equally suitable for all
organisations, but employers should ensure that any changes in existing schemes
are fully explained to employees. "

By Ben Willmott

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