Yorkshire Building Society cuts £45m DB deficit

Yorkshire Building Society is increasing its pension contributions in order to help offset the £45.8m deficit in its defined benefit (DB) pension scheme.

The financial firm has lifted employer contributions to the final salary scheme from 17.3% to 22.5% for staff who agree to bump up their contributions from some 6% to 8%.

The offer applies to around 1,000 members of the DB scheme, which was closed to new members in 1999 and had a deficit of £45.8 million as at end of 2004, according to the building society’s annual report for that year.

Antonia Praud, reward manager at Yorkshire Building Society, said: "999 out of 1,000" staff had signed up to the deal.

There are no changes to contributions to the firm’s defined contribution (DC) scheme, which has about 1,000 members. Contributions to the DC scheme are age-based, and range from 3% to 5%.

The building society is also conducting training for employee trustee members of the final salary scheme to ensure they are prepared for the more onerous obligations that they will face from April this year.

In a worst case scenario, employee trustee members could be personally liable for poor fund performance if they fail to exercise due care and diligence.

"It’s our responsibility that they understand their responsibilities," Praud said.

Yorkshire Building Society is the third largest building society in the UK. The increase in contributions to the final salary scheme follows a 5.3% improvement in operating profits to £73.4 million for the year ending 31 December 2004.