We are urging members to vote for the agreement in the e-ballot, the arrangements for which are as follows: 1. The e-ballot will open on 8th March at 1pm and will close at 12 noon on 24th March. 2. You will be sent an email on the 8th March with a link to the secure electronic ballot to vote on these proposals.

In addition to these comms, we will be holding two meetings open to all members of both Prospect and the CWU the arrangements for which are as follows;

Friday 4th March 2011 12 noon Room 8.10, One Reading Central

Tuesday 8th March 2011 12 noon Conf Room 1, Whitefriars, Bristol

If you wish to discuss these proposals further and cannot attend the members meeting please contact a member of the branch committee in the first instance.

The agreement

The agreement, in brief, involves;

Closure of the defined benefit sections (Sections 1, 2 and 3) of the Yell Pension Plan to future accrual on 31 March.
All affected members of the defined benefit ('DB') sections invited to join a new Section 6 - a defined contribution ('DC') scheme with an employer contribution rate which is high (compared to other companies) and which increases with length of service.
Death in Service benefits which we view as broadly comparable with those currently payable by the DB sections.
Coverage by a long-term-illness income replacement scheme which, when taken together with early payment of pension from the DB sections, is broadly comparable to the medical retirement benefits available from the DB sections.
Continued access to early pension where individuals who would have been entitled to such benefits under the DB sections (i.e. those leaving on redundancy who are aged 50 or over who were members of Sections 2 or 3 at 31 March 2011).
Below we set out a little more detail on each of these aspects of the agreement.

We would clearly prefer not to be dealing with the closure of the DB sections. The fact is, as we have said at the two meetings we have held for members so far, that such schemes have become practically unsustainable - at least in unmodified form - and few now remain open to future accrual in the UK. Where they do - and this is becoming exceptional - they are being heavily modified and the changes are detrimental.

We faced two alternatives in Yell. Should we press for the maintenance of the defined benefit arrangements, albeit quite probably substantially and detrimentally changed, or should we seek high quality defined contribution arrangements? Yell's own position quickly became clear. They sought to cap their liabilities and close the defined benefit scheme to future accrual. In return, the unions were able to secure Yell's agreement to tabling quite high employer contribution rates for the new defined contributions section of the Yell Pension Plan.

We believe this is, in the circumstances, an acceptable compromise. By cooperating with the company over closure we have, we believe, been able to secure a higher level of contributions from Yell than would have been possible in other circumstances. And given Yell's current situation in a very challenging market, maintaining the defined benefit scheme in anything like its current form was unrealistic.

Employer contribution rates

The rates are set out in the table below. The employee contribution rate defaults at 4% but it is open to the individual to contribute any amount they wish to (capped at 100% of earnings). The default rate is set at 4% as members of the DB sections currently pay 5.5% or 6%; given that Section 6 is contracted in to the State Second Pension, members will have to pay higher National Insurance contributions, by 1.6%, so a 4% default contribution to the new scheme leaves members paying, in total, more or less the same towards their pension. The DB sections were contracted out of the State Second Pension and a formal notice regarding ceasing to be contracted out from 1 April 2011 is available on the 'Pension Changes' page of iYell. This is a legal formality.

10-14 years' service - 12%
15-19 years' service - 14%
20+ years' service - 16%

Even at this rate of employer contribution, the new DC arrangements will probably not generate a pension as valuable as the DB sections would have provided. Moreover as it is a DC scheme, there is no certainty as to what exactly it will generate. But it should be capable of generating quite decent pensions; pensions which we think would be broadly comparable to what a heavily modified DB scheme could provide. In the circumstances we are recommending acceptance of this approach.

Retirements Benefits from the Yell Defined Benefit Sections

As this scheme will close to future accrual with effect from 31 March 2011, members of the scheme will have a deferred pension in that scheme, based on their reckonable service and their pensionable salary at that date. The pension that will become payable at retirement will be increased in line with legislation (which currently uses CPI as the measure of inflation) from now until retirement.

Members will be able to take their pension from the DB section at the same time as they draw their pension from Section 6 - the DC Scheme. Members can take this at 60 or indeed at any age after 55 though early payment deductions will apply before 60.

Ill Health Benefits

Under the DB sections, should a member fall ill and need to retire on ill health grounds, they would be entitled to immediate payment of an enhanced pension. With that scheme's closure, members would still be entitled to early payment of their pension from the DB section should they medically retire, but that enhancement would not be available. It was therefore important that we secured benefits in the context of the DC scheme that would not result in serious detriment should an individual fall so ill whilst a member of the DC scheme that they would need to retire on medical grounds.

The agreement includes provision of incapacity benefits which, when added to the payment of the more limited benefits available to deferred members of the DB sections, should leave most people no worse off - and in some cases (notably where people are in their 50s - and most medical retirements do affect people in that age range) the level of benefits will be a little higher.

Death in Service

The DB sections pay both a tax-free lump sum and a dependant's pension in the event of a member's death in service. The DB sections will continue to provide a dependant's pension, but based only on reckonable service up to 31 March 2011, so it was important that the DC scheme included arrangements for death in service that would not leave dependants materially worse off.

The DC scheme will provide a death in service lump sum of six times salary, plus a refund of the value of your Section 6 account. When this is added to the pension benefits payable under the DB section, this will leave dependants broadly no worse off.

Redundancy Arrangements

Members of the DB Sections 2 and 3 are covered by redundancy arrangements, which involve early payment of pension enhanced by up to 6 ¨ø years' reckonable service, for those aged 50 or over. It was important that we secured continued access to broadly comparable benefits in the context of the closure of the DB sections.

In any case of redundancy affecting a deferred member of Section 2 or 3 of the DB sections, those aged fifty or over at the time of the redundancy will be able to take the deferred pension from their DB section as at 31 March 2011, enhanced by up to 6 ¨ø years. They will also be able to take the pension earned at that point under the DC scheme. In our view, this provides a broadly comparable level of redundancy benefits.

Conclusions - An Acceptable Agreement

We would not argue that the overall proposal is going to generate a pension of the same value as the existing and unmodified DB sections. However, in the current climate - both generally in relation to UK pension provision and specifically given the challenges Yell faces - we strongly believe that this is an acceptable outcome to the pensions review.

Accordingly we recommend that members vote for it in the forthcoming e-ballot.