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Last Updated: Friday, 3 November 2006, 15:29 GMT
Pensions warning from opera house
Royal Opera House, Covent Garden.
Staff at the opera house may be booted out of their pension scheme
The Royal Opera House (ROH) has warned hundreds of staff they may be thrown out of their pension scheme.

The scheme's deficit has risen to more than 8m and one option is to close it to both existing and new members.

A recent letter to employees said if no action was taken the ROH would have to increase its contributions from 15% of staff salaries to 26%.

A second option is to close the scheme to new staff and restrict the build-up of benefits for current members.

The opera house management is currently consulting with staff and their trade union BECTU and says it would prefer not to close the scheme to its current members.

But in a letter to staff sent last month, the director of personnel at the ROH, Elizabeth Bridges, described a big rise in employer contributions as "not a financially viable option for the ROH".

Rising deficit

Despite raising its own contribution rate twice since 1998 - from 9% to 15% - the pension scheme deficit has grown from 6.4m in 2003 to at least 8.2m now.

The opera house blamed this on increased longevity and falling investment returns.

In 2005, pension contributions cost it nearly 1.4m. A further rise in contributions to 26% of salaries would push the cost up to about 2.3m year.

Closing the scheme to existing members would be extremely expensive as current legislation says that solvent employers cannot do this unless they make good any deficit.

The second option on which the ROH is consulting involves closing the scheme to new employees only.

They would be offered a money purchase scheme, instead of the final salary one currently on offer.

But existing scheme members would have to pay more than their current contribution rate of 6%.

They would also face a cap on the extent to which future salary increases are pensionable, and the extent to which pension payments can be increased would also be restricted.

No deadline

A spokesman for the ROH declined to give any further details but pointed out that there was no deadline and that sorting out the issue would "take as long as it takes".

Neither proposal would affect current opera house pensioners.

The ROH has about 800 full-time employees, with front-of-house, administrative and technical staff eligible for membership of the scheme.

It also makes contributions to separate pension schemes for singers, dancers and musicians.

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