BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific
BBCi NEWS   SPORT   WEATHER   WORLD SERVICE   A-Z INDEX     

BBC News World Edition
 You are in: Business  
News Front Page
Africa
Americas
Asia-Pacific
Europe
Middle East
South Asia
UK
Business
E-Commerce
Economy
Market Data
Entertainment
Science/Nature
Technology
Health
-------------
Talking Point
-------------
Country Profiles
In Depth
-------------
Programmes
-------------
BBC Sport
BBC Weather
SERVICES
-------------
EDITIONS
Tuesday, 19 November, 2002, 13:07 GMT
Trinity Mirror shuts pension scheme
A moneybox and money
Final salary schemes are seen as the best pension
Trinity Mirror has said it is closing its final salary pension scheme to new members.

With more than 250 titles, including the Daily Mirror and Sunday Mirror, Trinity Mirror is the biggest newspaper publisher in the UK.


Editorial policy and the company is completely different - we are a PLC and have to do what is right

Nick Fullagar, Trinity Mirror
The group blamed increasing life expectancy and the volatile stock market for the move.

The newspaper group's three existing schemes will be closed to new entrants from 1 January of next year.

Like many employers, Trinity Mirror will be replacing the final salary - or defined benefit - scheme with a defined contribution scheme.

In so doing, the risk associated with the pension fund's performance will be transferred from the company to the scheme's individual contributors.

Guarantee

Final salary schemes have traditionally been seen as the best type of pension a worker can get.

They guarantee to pay a retirement income based on a percentage of the contributor's salary, every year for the rest of their life.

The amount achieved depends on length of service and salary at the time of giving up work - the final salary.

Robert Maxwell
Robert Maxwell raided the Mirror pension scheme

Under defined contribution schemes, the retirement income a worker can expect to receive is much more uncertain.

This is because the final sum depends directly on the performance of the assets, such as stocks and bonds, in which the pension contributions are invested.

The risk that pensions will perform poorly and provide less than expected lies with the individual contributors rather than the employer administering the scheme.

Tycoon's raid

The Mirror Group - bought by Trinity in 1999 - was a name synonymous with pension scandal.

The tycoon publisher Robert Maxwell, who owned Mirror from 1984 until his death in 1991, raided the newspaper's pension fund leaving some members with nothing.

As a result, the government introduced extensive legislation to protect pension scheme members.


It is shocking that of all employers Trinity Mirror should be robbing employees in this way.

Jeremy Dear National Union of Journalists general secretary

'Legalised theft'

Newspapers within the Trinity Mirror stable in the past have expressed alarm at the trend of companies closing final salary schemes.

Ironically, in July, the Daily Mirror revealed the findings of its reader pension poll, with readers describing firms that closed final salary schemes as behaving no better than Maxwell and indulging in "daylight robbery" and "legalised theft".

The paper said that Chancellor Gordon Brown would do well to consult Mirror readers over the pensions crisis.

When asked if Trinity Mirror's decision to close its scheme was at odds with the newspapers' editorials, spokesman Nick Fullagar told BBC News Online:

"Editorial policy and the company is completely different, we are a PLC and have to do what is right.

"The economic climate has changed and the nature of the promise given by a final salary scheme means that there are long term issues at stake."

In particular, Mr Fullagar identified pension scheme members living longer and stock market falls in recent years as factors behind the decision.

Fight ahead

The National Union of Journalists (NUJ) told BBC News Online it would back all members of the Mirror Group's scheme that voted to strike or take other industrial action against the move.

NUJ general secretary Jeremy Dear said: "It is shocking that of all employers Trinity Mirror should be robbing employees in this way.

"This company is the successor of Mirror Group Newspapers, from whose pension scheme Robert Maxwell stole 420m 11 years ago. But this time it's legal!"

Employer costs

In ending their final salary scheme, Trinity Mirror follows a host of big-name British companies.

A recent Association of Consulting Actuaries (ACA) survey of 330 firms employing 1.8 million people found that the cost to employers of maintaining a pension scheme had increased dramatically over the past year.

As a result, just under half of all final salary schemes operated by the employers surveyed are now closed to new entrants.


Government plans

Help and analysis

Case studies

TALKING POINT
See also:

11 Nov 02 | Business
06 Nov 02 | Business
01 Nov 02 | Business
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |
Programmes