BusinessCompany NewsBanks set to relaunch final salary schemes

Banks set to relaunch final salary schemes

Two FTSE-100 banks are considering plans to reopen their final salary pension schemes despite a mass of closures among other companies blamed on the now notorious accounting standard FRS 17.

The two businesses have remained anonymous while they finalise their decisions but it is understood the move has come about in a bid to attract senior staff amid growing pessimism about company pensions.

Of the nine banks in the FTSE-100, all have closed their final salary schemes to new members except the Royal Bank of Scotland.

Sources close to the company boards told Accountancy Age: ‘These companies are looking at reinstating their final salary schemes at senior management level. With everyone else closing theirs it’ll give them a competitive advantage to attract and retain senior staff.’

This year has seen an unprecedented number of the UK’s leading employers closing their final salary schemes to new, as well as existing, members, leaving employees to opt for money purchase schemes which place more risk on staff than employers.

Many companies have blamed their pensions decisions on FRS 17, the controversial accounting standard, which requires companies to book scheme assets and liabilities in the balance sheet, instead of allowing for the traditional so-called ‘smoothing’ method.

Ernst & Young caused uproar in January this year when Accountancy Age revealed that the firm had decided to close its scheme to existing members.

A senior E&Y employee said ‘this betrayal’ had removed the remaining morsel of loyalty he had had for the firm over its competitors. The news comes as differing research into the effects of FRS 17 show greatly contrasting results.

Analysis by Mercer Consulting and accounting monitor Company Reporting has said more than half of the UK’s top companies will see a reduction in the value of their assets under FRS 17 when they put out their annual results in the next few weeks.

While actuaries Lane Clark & Peacock reported that FTSE-100 companies collectively show a surplus of over £5bn under the standard.

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