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Last Updated: Tuesday, 17 January 2006, 08:10 GMT
Bank proposing pension overhaul
Yorkshire Bank branch
About 3,500 Yorkshire Bank staff could be affected
The firm which owns the Yorkshire and Clydesdale banks has proposed scrapping its final salary pension schemes.

National Australia Bank (NAB) is putting the issue of whether to move to a career average pension scheme to a vote of its 9,000 employees in the UK.

NAB admitted such a move would reduce the entitlements of some staff but said it would make the schemes more secure - its UK schemes have a deficit of 426m.

A number of leading firms are reviewing the future of final salary schemes.

Crunch vote

RentokilInitial and the Co-operative Group plan to freeze their final salary schemes because of their huge costs while British Airways is reviewing options for its pension provision.

We believe the proposals for reform to be fair and equitable
Lynne Peacock, National Australia Bank UK chief executive

This year, the National Australia Bank has paid a total of 63m into its four UK employee pension schemes and it has pledged to pay an extra 100m into the schemes if the proposals are accepted.

However, it has warned that it will review the future of all the schemes should staff reject its proposals.

Members of the schemes - about 3,500 at Clydesdale Bank, 3,500 at Yorkshire Bank and 1,000 and National Australia Group Europe - are being asked to vote on the proposed changes by the middle of March.

Striking a balance

NAB said the proposed changes - which will not affect entitlements accrued before 1 April 2006 - would put the company's pension schemes on a "secure footing".

"We believe the proposals for reform - including the one-off contribution of 100m - to be fair and equitable and to provide a balance between the needs and expectations of scheme members and the long-term viability of the schemes," said Lynne Peacock, chief executive of National Australia Bank's UK operations.

The company said it had consulted with employee representatives and trade union Amicus before announcing the proposed changes.

It is currently scaling back its UK operations, planning to cut 1,700 jobs and close 100 branches over the next few years.

The bank's chief operating officer David Thorburn said that, in the long term, it would be good for employees.

Speaking to BBC Radio Scotland, he added: "No one is going to wave a magic wand and take the deficit away - unless we do something about it, the fund will not be able to meet its liabilities as people retire over the next few decades.

"With these proposals, the fund will be back on a sustainable footing and people can look forward to their retirements."


SEE ALSO:
Battle lines drawn on BA pensions
13 Jan 06 |  Business
Co-op closes final salary pension
04 Jan 06 |  Business
Rentokil mothballs pension scheme
20 Dec 05 |  Business
Bank to shut down 100 UK branches
11 May 05 |  Business


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