The closure of Clydesdale Bank’s defined pension scheme to new accruals should not come as a huge surprise given that more than a decade has passed since the bank closed the scheme to new members.
What perhaps is surprising is that this had not been done before, with one-third of staff still benefitting from the arrangement.
Staff were consulted ahead of the changes and the bank said the move would help align pension benefits across the workforce so all staff are rewarded equally.
Those losing out will likely not take much solace in the increased company payments to the group’s defined contribution scheme.
CYBG also acknowledged that the changes came after it reviewed the long-term sustainability of the scheme.
The overall UK pension deficit is estimated to have climbed £50bn between June and July, to sit at a staggering £460bn.
At the end of 2015, only five per cent of FTSE 250 groups still allowed staff to accrue benefits to DB schemes. It would seem that in joining the majority, CYBG is taking further action to curb its own liabilities.
The deficit has been reduced from £450 million in 2013 to £290 million. And in Q4 it will be helped by an £86m reduction based on the scheme’s closure.
The bank will continue to make annual payments to the fund of £50m to £55m until 2022, but ultimately, this closure puts CYBG is in a better financial position.
Unfortunately, the bank’s long-serving staff will now be playing their part in reducing future liabilities.
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