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City watchdog could scrap pension scheme.

Byline: Tim Ross

THE City watchdog confirmed yesterday it was considering scrapping its final salary pension scheme.

The Financial Services Authority has drawn up a range of options designed to cut the pounds 31.5m deficit in its pension fund as calculated under new accounting rules.

Among the possibilities being considered are a ``freezing'' of the final salary scheme - already closed to new members - and a ``hybrid option'' involving part final salary and part money purchase pensions.

A spokesman for the FSA said it was conducting a thorough staff consultation into the plans, and stressed that no final decision had been made.

The regulator's 2,000 workers are likely to learn the outcome of the review by late autumn or the end of the year, the spokesman said.

The plan for ending the final salary scheme would involve members' contributions being frozen from a certain date, and from then on they would use a money purchase scheme.

Asked if closing the final salary scheme was a possibility, the spokesman said: ``It's always got to be an option and many companies have done it.

``It's already closed to new entrants. ``Complete closure would basically freeze the people's final salary (schemes) where they get to. From then on they would deal in money purchase,'' he said.

The ``hybrid'' option would involve capping the final salary contributions at a certain level and any surplus from a pay rise above that level could be channelled into a money purchase scheme.

The FSA's last annual report stated that under the new accounting standard FRS17, which does not allow firms to smooth out stock market volatility, its pension scheme showed a pounds 31.5m deficit.

UNION PLANS STRIKES IN PROTESTA UNION was locked in a war of words yesterday with mobile phone giant T-Mobile over apparent plans to scrap a final pension salary scheme.

The news came as the first industrial action in defence of a final salary pension scheme was announced by the Iron and Steel Trades Confederation (ISTC). Members of the union at two Caparo plants owned by Labour peer Lord Paul will begin a work to rule on Wednesday ahead of a oneday strike on July 17. Workers at the factories in Scunthorpe and Tredegar in south Wales will then strike for one day a week.
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Title Annotation:Business
Publication:Daily Post (Liverpool, England)
Geographic Code:4EUUK
Date:Jul 9, 2002
Words:383
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