Barclays ends final salary pension plan
BARCLAYS told staff yesterday that it is to close its final salary pension scheme, prompting a furious response from unions, who accused the bank of stabbing its employees in the back.
The bank said it was closing the scheme as a result of the mounting cost of financing pensions for some 18,000 staff.
Members of the scheme will have their existing pensions frozen and transferred to a cheaper scheme that the bank currently offers only to new staff.
Rob MacGregor of the UK’s largest union Unite dubbed the move “a break in the promise by Barclays to their workforce that they will not put profits before people”.
“This attack on the pensions of the loyal and hard-working staff at the bank is utterly alarming. The union is urging the bank not to establish this change,” he added.
Barclays is the latest in a series of FTSE 100 firms to close their final salary schemes, as low interest rates, higher life expectancy and poor returns on investments push up the cost of funding such schemes.
Energy giant BP closed its own final salary scheme to new entrants earlier this week and pensions experts are already sounding the death knell for final salary schemes.
Duncan Haworth, president of the Society of Pension Consultants, said Barclays’ decision, coupled with energy giant BP’s closure of its final salary scheme, represented the “final nail in the coffin” for final salary pensions schemes, also known as defined benefit schemes.
“Barclays and BP are both resourceful companies but they just can’t see any end to rising pension deficits, so there is no option but to close the schemes,” he said.
Barclays had already closed its final salary scheme to new entrants in 1997, offering them an alternative scheme that depended entirely on stock market returns.
However, the bank was forced to introduce measures to shield members from a potential downturn in the markets, after an outcry from staff and unions.
BARCLAYS
WHO’S IN AND WHO’S OUT?
Temasek, the state-backed Singaporean investment firm, sold off its stake of nearly two per cent in Barclays in early 2009 at a loss of around £500m, sources say.
The company has invested more than £1bn in Barclays since July 2007, but outgoing chief executive Ho Ching (pictured) got out while the bank’s shares were depressed earlier this year.
Meanwhile, Barclays’ Qatari investors yesterday scotched rumours that they were planning to offload their stake in the bank.
Qatar Holding, a division of sovereign wealth fund Qatar Investment Authority said it had no plans to echo the decision of the bank’s Abu Dhabi investors, who sold an 11 per cent stake in Barclays earlier this week.
“Qatar Holding remains a supportive shareholder in Barclays, which it regards as a world class bank, led by a board of directors and a professional managment team for which it maintains the utmost respect,” said Ahmad Al-Sayed, managing director and chief executive, in a statement.
A spokesman added that the company hopes to “build on this fruitful relationship over the long term”.
Rumours of the Qataris’ exit followed the decision of Sheikh Mansour bin Zayed Al Nahyan, a member of the Abu Dhabi royalty, to sell a stake of more than 11 per cent in Barclays, netting a £1.5bn profit in the process.
The sale came despite promises that Abu Dhabi would be a “long-term strategic investor”.