Home > News > 2009 > August 2009 > Professional Pensions - Amex suspends contributions
Professional Pensions - Amex suspends contributions
By Jonathan Stapleton (20 August 2009)
American Express has suspended company contributions to its UK pensions in a bid to cut costs.
A spokesman for the financial services firm said the move would apply to both the firm's stakeholder and defined benefit schemes, take effect from July 1, and last a maximum of 18 months. He said most of Amex's 6000 UK employees were in the stakeholder scheme. The firm's final salary scheme has been closed to new members for more than three years.
In a statement the company said: "Following a period of consultation with employee representatives and employees, we have taken the decision to temporarily suspend company contributions to UK pension plans.
"This took effect from July 1, 2009 and the suspension of contributions will be lifted no later than January 1, 2011."
Barnett Waddingham partner Clive Grimley commented: "The simple fact of the matter is that this is a pay cut to all the affected employees."
However, AXA Life believed this would have a much greater long-term negative impact on the personal wealth of its employees than other measures. AXA Life head of corporate partnerships Mark Rowlands said: "While it may feel more palatable today for employees for their pension contributions to be reduced, it is actually much more harmful to their long-term wealth."
Society of Pension Consultants president Duncan Howorth said the suspension or variation of pension contributions has been a US practice - and said it was worrying to see it in the UK. Howorth said: "Employees and scheme members are already worried from loss of DB pensions and lower contributions to DC schemes. To start to worry about whether employee contributions will be maintained would only worsen what is already a painful cluster-headache. To visit Professional Pension's website please click
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