2. IER Seminar Defending occupational pensions in the private sector Bryan Freake – Unite Pensions Officer

3. Why members want defined benefits and final salary They are perceived as quality schemes They give a clear idea of what pension will be when you retire The employer takes the risk

4. When is DB not DB When pension increases are discretionary ? When pensionable pay is interfered with ? When pension is adjusted for mortality ? Changes like this have the scope to halve the value of the members pension Members may have little idea what they will get

5. Collective DC Schemes A DB scheme which allows the employer to fix their cost is a collective DC Scheme If pension increases became discretionary and benefits could be directly adjusted for longer mortality These changes are calculated not just to deal with inflation and mortality risk but also to cover investment risk

6. The enemies of DB ? Actuaries – who allowed the boom and failed to protect us against the bust Accountants – who have destabilised company accounts – and may go further with a risk free liability assessment Pension Consultants - who started the rush to Dc and overlooked alternatives

7. Who else can we blame ? The Government – as much good as there has been bad The Markets – inevitably but perhaps not deliberately Employers – are they justified in breaking their promises Pensioners –outstaying their allotted span

8. The Tory threat Pulling up the public sector anchor Raising State Pension Age quicker Taking de-regulation of pension increases further Allowing mortality to impact past service

9. Lets look at some Hybrids Barclays Unilever BAe Johnson Matthey

10. Barclays 3% contributions for 20% ‘cash balance’ at age 60 Cash balance revalued at RPI + up to 2% based on investment performance Plus a DC element with a match of up to 3% for 3% Contracted-in

11. Unilever New entrants scheme 5% for a 1/60 CARE benefit at age 65 on salary between £4500 - £38,000 CARE revaluation RPI up to 5% - upper salary threshold linked to Unilever pay increases Company pays 12.5% salary /pension allowance on pay above £38,000

12. BAe 100 New entrants scheme 1/100 final salary benefit 2% credited to DC account Member contribution 4% Longevity adjustment factor Contracted-in

13. Johnson Matthey Non-contributory 1/80 CARE scheme benefit at age 65 Employee contributions matched in DC supplement to a maximum of 3%:3% Contracted-in

14. Hybrids that did not last Action for Children Alstom Goodyear Smiths De La Rue (proposed closure)

15. DC schemes paying at least 10% Akzo Nobel, AMP, Aviva BAA, BOC, Diabetes UK Finn Mechanica, Friends Provident, HSBC L&G, National Grid, NFU Mutual Phillips, Prudential, Reckitt Rolls Royce, RSPCA, Siemens

16. Transitional Compensation Steria – DC contributions individually targeted to have a reasonable chance of replicating previous DB benefits Fujitsu – (proposed) – 5% uplift in salaries to compensate for switch to a 5%:10% DC scheme Siemens – DC with matching up to 10%:10% with special contribution supplement for 15 years at maximum declining from 10% to 5% over the period

17. Where are we Going 80% of DB schemes closed to new entrants compared to 20% in 2000 20% closed to further accrual by existing members and rising more rapidly Current law allows plenty of scope for risk sharing Increasing flexibility may only accelerate the decline in scheme quality

18. Resisting the Tide Employers are forced now to consult We must make them negotiate There is always scope for a better deal Unite is pledged to support members prepared to take action to defend their pensions