IT giant IBM has pushed back its final salary pension scheme closure by one year amid a prediction that up to 1,000 UK staff may apply for early retirement.
The company recently announced that the closure, scheduled for April 2010, will now take place in April 2011.
Trade union Unite said the delay followed a “backlash by thousands of IBM employees” angered by the proposals. It also said that between 700 and 1,000 employees will apply for early retirement before April 2010 when the early retirement age will rise from 50 to 55.
IBM said little on the development, other than it “is in a process of consultation as required by law during which time employees will have the opportunity to ask questions and send feedback on the proposals”.
Unite added that IBM’s revised proposals would include an enhancement of its contributions to employees’ defined contribution schemes for two years, plus the retention of current death benefit and ill health provisions.
The union also said employees in their 50s could lose up to £200,000 when the final salary scheme does close.
Peter Skyte, Unite national officer for IT and communications, said: “The latest IBM proposals, while modifying some of the detail and mitigating some of the impact in the short-term, do little to alter the substance of the company’s original proposal. They still propose the closure of the defined benefit pension scheme and replacement with a vastly inferior money purchase scheme.”
But recently the National Association of Pension Funds granted a quality award to IBM for its defined contribution scheme. The award, one of several presented by Angela Eagle, Minister for Pensions and the Ageing Society, certify that the receiving companies’ defined contribution pension schemes have met the key qualifying criteria on contribution rates, governance and communications.
Fujitsu
Unite is also fighting the proposed closure of the Fujitsu final salary scheme and said it is organising a ballot on industrial action. It said an earlier consultative ballot resulted in 87% of Unite members at Fujitsu who voted favouring strike action against the company.
Dairy Crest
Meanwhile Dairy Crest said it will close its final salary scheme in April 2010. About 3,500 of the milk producer’s workforce are scheme members. It has completed formal consultations with employees and their representatives.
The company’s finance director Alistair Murray said: “The reason we are closing the scheme is not to do with saving money or saving cash.” Dairy Crest will still have to pay £20m a year, he claimed, to pay off the scheme’s deficit.
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The Financial Times said the Dairy Crest pension fund deficit was £63.3m in March, compared to a £31.6m surplus a year earlier.
In June Dairy Crest paid £160m for an insurance policy with Legal & General that covers pension liabilities to about 7,000 retired staff.
