Prudential has refused to pay £2,000 for financial advice to all defined benefit (DB) scheme members moving to a new pension arrangement.
Following workers union Unite’s calls for all DB members to receive an ex gratia payment of £2,000 towards the cost of advice, Prudential has said that while it supports the provision of advice ‘of some form’ to all members, it is working on a different offer.
Unite said each member should have access to adviser who could explain how the changes affect them personally. The adviser would also help members decide whether to stay in the scheme or opt out.
A Prudential spokesperson said: 'M&G Prudential is currently reviewing its UK pension arrangements and has entered into a consultation process with its UK employees and associated representatives. We are wholly committed to providing our staff with valued pension arrangements as part of their overall compensation package.'
Negotiations about the pension scheme have been ongoing since Prudential dropped Capita for Diligenta earlier this year as the administrators of a £700 million pension administration contract.
As part of the arrangement, members will be transferred from the Prudential DB scheme into a new non-contributory defined contribution (DC) plan. It has been proposed that in the first year, members will receive an employer contribution of 24%. Over the second year and third year employees will receive an employer contribution of 16% and a further 13% plus 1% matching from the fourth year onwards.
Prudential agreed to match up to 5% of contributions from the original proposed 4%.
In addition, those who currently contribute 6% will gain an additional 1% contribution or have the option to drop their contribution to 5% and get the same as they do at present.
As part of Prudential’s proposal for DB members, chief operating officer Roddy Thomson said those on lower salaries will be protected by setting a base salary of £30,000 before capping pensionable pay.
Nonetheless, Unite said it is still disappointed that middle earners are not included. ‘The majority of members will still be significantly disadvantaged financially by this revised proposal. We are also frustrated that there has been no inflation proofing in this element, meaning the value of the cap will reduce in real terms over time,’ it said.
The consultation period on these proposals closed on 15 December. Unite is awaiting to be informed of the company’s final position. Once this is established, the union said it will ‘consider if any further action is necessary, which could include speaking to the media or industrial action.’