The company wrote to members of the scheme about its proposal to double the member contribution rate from 6% of pay to 12% in May. It also proposed a salary supplement instead of pension payments, or a non-contributory defined contribution alternative, for those who could not afford the proposed increase.
Prospect has since consulted with members and submitted a formal response based on their views.
The response acknowledges that the cost of benefits provided by the scheme have increased but argues that the company has room for manoeuvre because total pension costs will have fallen due to a significant reduction in the number of active members of the scheme.
Prospect called on the company to:
- spread the proposed increase in the contribution rate over a longer period so more members can afford to retain their current level of benefits
- offer a reduced cost option within the defined benefit scheme and remove any inducement to leave the scheme
Neil Walsh, Prospect’s pension officer, said: “The change in discount rate since the last valuation of the scheme has meant that the reduction in benefits and increase in member contributions implemented at that time were not enough to control costs.
“However, the active membership of the scheme has fallen significantly and this offers space for the company to adjust its proposals to mitigate the impact.
“It is particularly important for the company to facilitate ongoing membership of the scheme for those concerned about the issue of affordability rather than cynically offering inducements to opt out altogether.”