6th February 2018 Anne-Marie Winton comments in Pensions Expert on Nissan’s proposed switch to Care arrangement scheme
Car manufacturer, Nissan, is consulting on a proposed switch to a career average scheme to reduce the volatility of its pensions liabilities.
This decision comes in the wake of BMW moving its final salary scheme members to defined contribution. Workers accepted the changes and stopped their strike after BMW offered a cash incentive of up to £25,000 per person.
Anne-Marie Winton commented that care schemes were often seen as a compromise between final salary and DC, as they still deliver salary-related benefits but with less risk for the employer.
In 2017, Jaguar Land Rover switched its DB schemes from final salary to Care to improve the sustainability of the schemes while keeping employees on board.
But Anne-Marie warned that employers might not necessarily want to stop there. She likened the removal of DB to ripping off a plaster, with employers sometimes putting in Care as a step towards DC to ease the pain.
“It is not uncommon for there to be a switch to DC benefits a few years down the line if the burden of funding the accrued defined benefits becomes too large,” she said.
Care scheme closures seemingly attract less publicity, she argued, although consultations are still required.
Read Anne-Marie’s comments in Pensions Expert
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