AN INSURANCE company is to close its well-funded final-salary pension scheme to new employees next summer, reports The Times .
According to the paper, Friends Provident, whose pension deficit is only £16m under the FRS17 accounting standard, will also require existing members of the pension scheme to choose between higher contributions to retire at 60 or reduce contributions if they want to retire at 65.
Although in 2003 Friends Provident was one of the first companies to use derivatives to hedge against inflation and interest rate changes, a spokesman said the company was reluctant to continuing exposing shareholders to the effects of longer life expectancy.
However, Amicus, Britain’s biggest private sector union, said that it was “extremely disappointed” by Friends Provident’s decision, which came after the company’s triennial actuarial review.
Friends Provident’s £850m scheme was fully funded for many years but the company was forced to take a contribution holiday between 2000 and 2003 because, under government rules, businesses with healthy schemes did not receive tax relief on their contributions.
The scheme has 4,000 active members, 3,000 pensioners and about 8,500 deferred members. From July 2007, current members who want to keep their retirement age at 60 must increase their contributions from 3% in steps of 1% per year to reach 7% by 2010, while workers happy to retire at 65 will have their contributions decrease from 3% to 2% over the same period.
WELLCOME Trust, Britain's largest charitable foundation, is launching a bond to raise cash to invest in scientific research - the first public bond to be launched by a UK charity, following the lead of US organisations, reports The Scotsman.
The trust plans to take advantage of low-cost, long-term funding in the sterling bond market to raise £300m to £500m when it issues the 30-year bond. The trust's funding of biomedical research is second only to that of the Bill & Melinda Gates foundation.
Rating agencies Moody's and Standard & Poor's have rated the bond a AAA rating - the only non-public or government-related UK body to receive such a rating - because it considers it the best quality and carries the smallest degree of investment risk.
The trust will plough the proceeds into its investment portfolio, which had £12.3bn at the end of September 2005. The portfolio has seen average returns of 9% a year over the past decade.
DISGRUNTLED INVESTORS in Lloyd's of London said yesterday losses suffered during the 1990s were the result of regulatory failure, reports The Guardian.
And according to the paper the investors said they plan to launch a legal claim against the British government for more than £1bn in compensation.
Around 1,100 names are part of the group which plans to sue the government, claiming they made heavy losses investing in the insurance market because the Treasury failed to implement key European Union directives.
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