Pharmacy News
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Pharmacy resourcing aims to keep you in the know.
Feature Story;
Alliance Boots has entered intoconsultation with
workers over plans to end its final salary pension scheme to
existing members.
The British pharmaceutical wholesaler has plans to introduce a new
defined contribution scheme in its place.
Alliance Boots said the changes would enable them to offer more
sustainable competitive pension benefits to workers.
Commenting on the topic, Company's executive chairman Stefano
Pessina said, "We are not doing this to save
money. We hope many more people now will adhere to our new
defined-contribution scheme."
Alliance Boots schemes have a net retirement surplus of ?188
million at March 2009, but the company said it wanted to eliminate
instability from its balance sheet.
The move will affect around 15,000 workers who have a final salary
agreement with the company.
Defined contribution scheme is normally seen less generous for the
workers than final salary scheme, but at the same time it proves
less risky for the companies.
Standard Life and the Daily Mail compare potential pensions for a
graduate contributing to a pension from the age of 22 until
retirement at 65. Here they used a starting salary of £20,000
rising to £50,000. Their calculations assume 3.5 per cent annual
investment growth and zero inflation, so you can see the results in
today's terms.
PRIVATE SECTOR FINAL SALARY
Employer and, possibly, employee contribute. Most guarantee to pay
1/60 of final salary for each year worked. Some employees have cut
this to 1/80 or 1/100 of final salary. Part can be converted to
tax-free lump sum.
WHAT YOU'D GET: £179,166 tax-free plus £23,888 a year
PUBLIC SECTOR FINAL SALARY
Rules vary. There are four times as many members of open public
sector schemes as private sector. Employee may contribute but, in
many cases, no fund is built up. Instead, taxpayer foots bill. Most
pay 1/80 of final salary for each year worked, plus a tax-free lump
sum.
WHAT YOU'D GET: £154,531 tax-free plus £20,716 a year
AVERAGE SALARY
Employer, and, possibly, employee contribute. Most guarantee
to pay 1/60 of average lifetime salary for each year worked. Part
can be converted to a tax-free lump sum.
WHAT YOU'D GET: £134,167 tax-free plus £17,888 a year
EMPLOYER DEFINED CONTRIBUTION
Employer and employee contribute. Money invested, usually in stock
market. At retirement, pension pot is used to buy an annuity which
pays income. Average combined employer and employee contribution is
11 per cent of salary.
WHAT YOU'D GET: £89,610 tax-free plus £10,612 a year
PERSONAL DEFINED CONTRIBUTION
Those without employer pensions contribute to a personal pension
(we've assumed they've put in 10 per cent of their income). The
money is usually invested in stock market. At retirement, pension
pot which has been built up is used to buy an annuity which will
pay them an income for the rest of their life.
WHAT YOU'D GET: £81,464 tax-free plus £9,655 a year.