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Pension payslip

West Brom closes final salary scheme to save £800k a year

By Michelle McGagh | 10:05:18 | 20 July 2009

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West Bromwich Building Society is closing its final salary pension scheme, a week after it was revealed that former boss Stephen Karle walked away from the mutual with a £520,600 payout.

The scheme, which is £1.6 million in deficit, will be closed to existing members – stripping 250 staff of future benefits, according to The Sunday Telegraph.

Staff will be transferred to a defined contribution scheme, where they will keep benefits earned to date but future accruals will not be linked to final salaries. The scheme was closed to new members in 2002.

The closure of the scheme saves West Bromwich £800,000 a year and, unusually, the building society has admitted that the closure is to cut costs.

West Bromwich needs to make savings of £15 million a year after being on the verge of collapse earlier this year – it was saved by a government debt deal, but has since shed 200 jobs.

Last week it was reported that Stephen Karle, former West Bromwich chief executive, was given a pay-off of £520,600, despite taking the mutual to the brink of bankruptcy.

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Comments (6)

derek farman - outrageous

11:55 | 20 Jul 2009

How can the man walk away with such a payout when the final salary pension scheme for his employees is being closed . There are some ghastly examples of selfish people around .

I think this final salary pension business needs sorting out fast .

If companies cannot afford to keep them going at the moment then either they should agree a percentage of salaries at which they could carry on , or freeze the pot until things improve , but never ditch them .

Ron - daylight robbery.

12:23 | 20 Jul 2009

So the ordinary workers will have a reduced pension because of the inadequacy of a useless nondescript who has conned the company.

JS - Hybrid

12:37 | 20 Jul 2009

A few years ago a number of providers offered a type of scheme that was money purchase but offered a final salary underpin. The employee then got his money purchase pot but knew there was a floor that provided security.

This was based on individual member money purchase accounts but then there was a general reserve pot to cover any shortfall on an individuals retirement. These schemes were ideal for smaller employerswho could not risk going the full way to DB but wanted to give employees a better quality benefit.

The problem with these came with regulation bringing them in full under the DB scheme legislation and all the issues an employer faced with that - sledgehamer & nuts yet again.

The result was good intentioned employers being forced once again to go money purchase.

Those who make the legislation need to understand that by making the pension tail wag the employer dog, they make it impossible for most employers to consider what they would like to install. And those with good schemes to run away from them.

The FSA & government policy makers are much too intent on shaving down charges yet another two tenths of a basis point, thinking that is doing everyone a good turn. In reality it is busting the industry and not allowing investment and therefore invention of new ideas.

Get off the industrys back FSA - concentrate on de-legislation and making things less complicated and allow the industry (within charge guidelines) to invent.

derek farman - Brilliant letter entitled 'Hybrid'

13:49 | 20 Jul 2009

Well done JS .... The idea of a final salary underpin is very sensible and I am sure many employers , if not most of them would wish to adopt such a program rather than dump their schemes . However should we be surprised that when the government poke their noses in , and introduce complex and muddled legislation things get messed up .

Blunket was given the job of looking into the pensions mess a few years ago . I wrote to him to warn that the government were making pensions way too complicated (I certainly couldn't get my mind around it) . Of course I got the usual bland letter in reply that my comments were "NOTED" .

Jon Rudge - What about Karle's pension?

19:24 | 20 Jul 2009

the 520k was only the tip of the iceberg !

I understand that Karle will get a £95k pa pension from age 65 as well. If this is index linked (probably is) then he would need a pension pot of around £2.5 million. Not bas for a few years' work wrecking the WBBS and losing other people's money.

Another marked man cone the Revolution !!

derek farman - fair legislation

11:07 | 21 Jul 2009

It's about time we had some sort of legislation covering the banking sector especially whereby payouts if any are geared to the figures .

Not rocket science that loss should equal zero payout and sliding scale for profit .

These weasels who cause all the problems should have their payouts frozen and all the money put into employee pension pots

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