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United Utilities amends terms of pension scheme

In what many believe could be the start of a whole wave of adjustments to defined benefit pension scheme arrangements, United Utilities has this week announced changes for the future. The company had been running a deficit of £359 million at the end of September 2009 but this has now fallen to £271 million at the end of March 2010. So what changes are afoot?

In simple terms the United Utilities defined pension scheme will be less generous for those taking retirement in the future with members forced to increase their own contributions, an increase in the retirement age as well as a capping of the maximum pensionable salary used to define benefits in the future. When you consider that many companies in the UK are currently running pension fund deficits in the hundreds of millions of pounds it is easy to see why changes are likely to occur which may not necessarily be beneficial to members in the short-term.

This move by the United Utilities group appears to have the backing of the unions which reflects the severity of the situation and the fact that changes need to be made to protect future members and future payments. So who will be next to amend the terms and conditions of some very generous pension schemes in the UK?

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