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American Express suspends contributions to UK pension scheme

In a move which many people hope will not be replicated across the UK business sector, American Express has today announced that company contributions into the UK final salary pension scheme have been suspended. The U.S.-based giant has, like so many other financial companies, suffered during the recession and confirmed plans to stop matching employee contributions for the next 18 months, something which will affect the company's 6000 strong UK workforce.

It is believed that the move is part of an overall cost-cutting initiative which will see £1.6 billion chopped from the company's cost base. However, pension advisers in the UK have reacted with surprise and scepticism to the move which while commonplace in America is often seen as a last resort in the UK. This follows a suspension of pension payments in the US, albeit only temporary, as the company strives to retain as much cash flow is possible in these difficult times. However, suspending the payment of pensions does not exactly give a signal of confidence for the future.

This latest move by American Express reflects the confusion and mystery surrounding the UK pensions industry, the future of which is becoming more difficult to forecast. Whatever will we see next?

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