Steve Bee and the RMT’s Bob Crow discuss Final Salary Pensions versus Money Purchase Schemes
Friday, 16 November 2007
In the latest podcast from Scottish Life's 'Pensions Radio', Steve Bee, Head of Pensions Strategy, talks to Bob Crow, General Secretary of the National Union of Rail, Maritime & Transport Workers (RMT), covering the importance of pensions to individuals and trade unions, final salary pensions compared to money purchase schemes and the general trend that employers seem to be reducing their commitment to their employees' pensions.
Steve Bee commented:
"Over the last few years, many companies have been switching from final salary schemes, where the employer takes both the longevity risk of members living longer and the investment risk of stockmarket fluctuations, into money purchase schemes, where both these risks transfer to the employee. At the same time employers have often been reducing their commitment to pensions, with contributions falling from previous norms of 15-20% to around 5-8% today.
"While this is not an issue for people my age, who benefited from our employers' previous investment in pensions, our children are generally not going to get final salary pensions. They are going to take on the higher risk of money purchase schemes and, crucially, they are not going to get large amounts of money paid into their schemes by employers, as we did with our final salary schemes. A lot of employers have walked away from funding pensions and people need to understand what that means for retirement in the future."
To hear the full conversation, or to access the archive of all Steve's Pensions Radio podcasts, go to www.scottishlife.co.uk/beehive.
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For further information please contact:
Scottish Life
Steve Bee
Head of Pensions Strategy
Tel: 020 7506 6740
Alasdair Buchanan
Head of Communications
Tel: 0131 456 7133
Polhill Communications
Jenette Perry
Tel: 020 7655 0530
Editor's Notes:
The BeeHive regularly attracts over 20,000 visitors a month to Steve Bee's regular 'BeeLines' which are dedicated to demystifying pensions.
The site's Pensions Radio podcasts have featured interviews with various key opinion leaders in the industry, including:
Ros Altmann, pensions campaigner;
Nigel Waterson, Shadow Minister for Work and Pensions and Conservative front bench spokesman on pensions;
Lawrence Churchill, Chairman of the Pension Protection Fund;
Malcolm Small, the Chairman of the Pensions Network;
Danny Alexander MP, Liberal Democrat Shadow Secretary for Work and Pensions.
Robin Ellison, NAPF.
Scottish Life was founded in 1881 in Edinburgh as a proprietary company, becoming a mutual company in 1968.
On 1 July 2001, Scottish Life demutualised and transferred its business to The Royal London Mutual Insurance Society Limited. Scottish Life is a division of Royal London and is the specialist pensions business within the Group, providing individual and group pensions to the market via intermediaries.
Scottish Life and Royal London's other intermediary businesses are based in Edinburgh where 1,200 staff are employed, with 195 working in other parts of the UK and overseas.
Royal London Group is a specialist financial service provider. Its businesses focus on those sectors of the market which value premium propositions, operating through a number of brands:
- Scottish Life – UK pensions market
- Bright Grey – UK protection market
- Scottish Life International – offshore investment markets
- RLAM – fund management
- RLAS – life and pensions administration
Royal London is the largest mutual life and pensions company in the UK with Group funds under management of £32.9 billion. Group businesses serve around three million customers and employ 2,580 people.(Figures quoted are as at 30 September 2007).