UK - The National Union of Journalists (NUJ) has raised concerns about proposals to close Express Newspapers' defined benefit (DB) scheme to future accruals.
The Express Newspapers 1988 Pension Scheme, run by Northern & Shell following its acquisition of the Express newspapers group, was closed to new entrants in October 1996 and a defined contribution (DC) scheme was established at that time for new employees.
However, Barry Fitzpatrick, national newspaper organiser at the NUJ, said the employer had now initiated a 60-day consultation process to finally close the DB scheme to future accruals, and existing members are being offered the DC scheme as an alternative.
Figures from Northern & Shell's annual report for 2007 showed the group had increased contributions to the DB scheme from 6% in 2006 to 16% in July 2007 - equivalent to £1.4m in contributions - but had also paid in an additional £3m as part of a recovery plan to meet a funding shortfall, which the NUJ claimed is around £56m (€71m).
The report does not give individual figures for the pension fund but instead showed the combined value of the Express 1988 pension fund and the Express Newspapers Senior Management Pension Fund - also a DB scheme - was £351.8m at the end of 2007 with an aggregate deficit of £67.2m.
"We have a lot of questions to ask the company about why it is happening, and how it is being done," said Fitzpatrick.
"Clearly, the main concern is it will be a massive loss of benefits to people still in the old scheme, and if they have just 5-10 years to run it will have a big impact on their pension valuations."
The NUJ revealed it is scheduling a meeting for the beginning of November in which it will discuss the next steps, and highlighted there is a "huge gap" in employer contribution levels between the DB and the DC schemes.
Members of the DB scheme currently receive a 16% contribution from the employer and pay 6% from their own salary, while in contrast the DC scheme would offer an 8% employer contribution and require 4% from employees.
Because of the difference in contribution levels, Fitzpatrick said the union anticipates "a lot of people will not be willing to enter the DC scheme, either because they do not trust the company, or it is not attractive enough".
"There is a huge gap in what the employer will pay so the alternative scheme will be nowhere near comparable," said Fitzpatrick.
"We think a lot of people will not bother to join the DC scheme so not only does the firm save 16% contributions on the DB scheme, in a lot of cases it will not pay 8% either," he added.
The pension fund is scheduled for its next triennial valuation in April 2009 - the most recent valuation was on 5 April 2006 - but the NUJ said the current economic conditions mean any valuation of the scheme at the moment could be distorted by market events and the figures could be "very different" from a valuation conducted in a few months time.
"It is not a good time to be valuing a scheme and making judgements on the current valuations. We're concerned the employer is rushing into it and with the volatile markets it is unreasonable to base things on today's assessment," continued Fitzpatrick.
Northern & Shell Network, owners of Express Newspapers and the pension funds, declined to comment on its proposals at the time of publication.
If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com
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