O2 Pension Review update


O2 Pension Review update

We recently issued a briefing, which advised that O2 had announced a review of its final salary pension schemes (sections 2 and 3). This newsletter provides an update.

We are grateful to members who have fed back their concerns to us. We have noted them all and resonded to as many as possible. Please forgive us if we have not responded to you personally at this stage. However please be assured that your feedback is informing the way we approach our discussions with O2.

The talks have so far focused on O2 concerns about the increasing cost and risks associated with the pension arrangements. This is a result of increasing life expectancy and lower investment returns. These are problems that are facing all defined benefit pension schemes.

The company has increased its contributions to Sections 2 and 3 significantly since O2 was established. In 2002 the Company contribution amounted to 11% of salaries. Its' contribution has subsequently risen to 26.7%. This excludes additional cash payments, now amounting to £40million a year to fund the past service deficit.

The Company is keen to look at ways to reduce the cost and to control investment risk against that background.

Prospect and the CWU have strongly represented members views in our determination to keep the Defined Benefit Sections open for future service. However, we have confirmed we are prepared to discuss ways in which the pensions can be changed in order to retain the Defined Benefit arrangements.

The union has also asked O2 to give clarity over the company's future plans for pensions and as our discussions continue we will update members on developments.

Prospect will ballot members before any changes to the pension scheme are agreed.