Dairy Crest could cut its final salary pension liabilities by £30 million by offering deferred members an enhanced transfer value (ETV).

The dairy food firm has sent out information packs explaining the ETV deal, which will provide deferred members with an enhancement if they transfer into its defined contribution (DC) plan. About 4,500 members have until January to take up the offer.

Dairy Crest does not expect a large take-up of ETVs, which may be suitable for only some deferred members. Rob Tansey, group HR director, said the enhancements would vary between individuals and would follow FSA guidelines.

Members who accept the offer can expect to get a big enough DC pot to provide a similar pension to the one they would have received under the final salary defined benefit (DB) plan, which is closed to future accrual.

Calculations will be based on a conservative prediction of the DC plan’s investment performance. Tansey said: “Actuaries do all the calculations, so the offer pack explains exactly what the cash value of their final salary pension is, what their pension would be if they remained in the final salary scheme, and what cash we are offering them to convert it and go into a DC arrangement.

“It is overt and transparent, and it is about talking to members at length to see whether it is the right thing for them to do or not.” Members aged 55 or over have been told they will not automatically receive a quote for an ETV because it is unlikely to be in their best interests because they are close to retirement. Members who receive quotes can contact JLT, the firm’s independent financial adviser, to investigate whether the deal is right for them.

Members taking the ETV must put the cash enhancement into the DC pension. “They can’t just take the cash and go and spend it,” said Tansey.†

“They have to put it into the pension arrangement. When they get to 55, they have some flexibility. They can take the pension, take a tax-free lump sum and maybe pay off a mortgage, but carry on investing in a different scheme.”

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