Wm Morrison (“Morrisons”) is to launch a new “cash-balance” pension scheme for October 2012 that will provide a guaranteed pension fund at retirement for employees making it easier for them to plan for retirement.
The improved scheme will be more understandable for colleagues and will provide a predictable pension pot when they choose to retire, a significant improvement on the existing defined contribution plan.
Morrisons will also be launching a campaign which aims to encourage Morrisons’ 131,000 colleagues to save for retirement and sign up for the affordable scheme. The campaign will be led by personal finance adviser and TV personality Alvin Hall.
A cash balance scheme, which is relatively unusual in the UK, shares the risk of being in the pension scheme between Morrisons and its employees. Morrisons will guarantee the pension pot payable at retirement when members typically purchase an annuity.
Key characteristics of the new scheme are as follows:
- The scheme will be open to all permanent employees
- Employees contribution will be at least matched by the Company and held in the new scheme
- Morrisons will manage and underwrite the investment to produce a guaranteed fund upon retirement , delivering a predictable pension pot for its employees irrespective of fund performance.
Morrisons researched various pension options and concluded that in order to encourage more colleagues to save for retirement, the company had to offer a more understandable and predictable pension than a defined contribution scheme.
Morrisons Group Human Resources Director Norman Pickavance said: “We are developing this innovative pension scheme because our aim is to build strong longer term relationships with all our colleagues. Providing a trustworthy predictable pension is our way of showing our commitment to our colleagues throughout their career and into retirement. I believe this approach will set us apart and help ensure that colleagues will stay with us for the long term.”
John Hannett the General Secretary of USDAW said: “USDAW has been very concerned about the pensions of shop workers and so the announcement by Morrisons that it is to offer our members the opportunity to guarantee their pension fund, when they choose to retire, is something we wholeheartedly support. We will work with Morrisons to help members understand what this scheme means for them and help them participate to invest in their future.”
The UK Government has been calling for companies to consider ways to encourage companies to offer other options than unpredictable defined contribution (DC) schemes.
Published 03/04/2012