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Barclays bank set to soften approach regarding pension scheme

The announcement, some weeks ago, that Barclays bank will be closing the company's final salary pension scheme caused anger amongst employees. Not only is the scheme closed to new members (as it has been since 1997) but existing members will be encouraged to transfer to a money purchase scheme with various incentives from the company. The idea is that the existing pension fund deficit will be covered by incentives to existing members and ultimately the final salary pension scheme will be closed down.

However, unions have been very quick to talk with their members at Barclays bank with the likelihood that tens of thousands of employees could well strike if the move is confirmed. As the directors of Barclays bank met yesterday to confirm the sale of Barclays Global Investors there was speculation that the company is willing to offer further incentives to those looking to transfer from the final salary scheme.

In simple terms, Barclays bank is looking to crystallise the existing deficit in the pension scheme and eliminate any potential deficit in the future. Final salary schemes offer pension arrangements based upon the member's final salary and years of service, with Barclays bank obliged to cover any shortfall in funding, while money purchase schemes effectively take the pot of the member in question upon retirement and acquire an annuity in the market place (there are other ways to draw down income but they are all based upon market annuity rates).

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