Standard Life is to close its defined benefit (DB) pension scheme to future accrual and enhance the terms of its defined contribution scheme (DC) for staff from April 2016.
Around 55% of Standard Life’s employees belong to its DB scheme which has been closed to new members since 2004. From April 2016, their existing benefits will be protected and employees given the opportunity to join its group personal pension plan (GPP).
Also from April 2016, the organisation has proposed enhancing the terms of its DC scheme.
Currently, DC scheme members receive a core 9% employer contribution, with no matching available for employee contributions.
It has proposed introducing matching employer contributions on employee contributions of up to 5%. Therefore, an employee contribution 5% a month via salary sacrifice would receive a company contribution of 14.5%.
According to Standard Life, the changes have been driven by the need to provide a consistent level of contribution towards employees’ pensions, as well as the need to mitigate the risks and costs asscoaited with DB pension provision, and the need to manage costs for the business.
The organisation is currently consulting with members of the DB pension scheme about the changes.
Sandy Begbie, chief operations officer at Standard Life, said: “The decision to propose a change to the DB scheme has not been taken lightly, but we believe it is the right one.
”At the same time, we are proposing increased terms for the DC scheme which would be the scheme for all employees going forward.
“The cost of providing pensions on a defined benefit basis is rising sharply so we’re taking action now before the cost grows even further. It’ll help us provide a competitive, sustainable company pension that’s consistent for all of our people, and also help our business keep performing well in the future.”
