(January 13, 2010) — The Automobile Association is one of three companies in the UK’s FTSE 100 index to stick by the expensive defined benefit pension scheme. It’s also “desperate” to keep its retirement plan open to new joiners.
While many UK firms, such as Barclays and Tate & Lyle, limited or withdrew DB pension benefits in 2009, the AA is unique.
The car insurance and recovery firm, owned by the buyout firms Permira, Charterhouse Capital Partners and CVC Capital Partners, is negotiating with unions about the future of the pension plan. “We do not want to move from a defined benefit arrangement, which we see as a valuable benefit for employees,” said chief executive Andrew Strong in a recent letter to staff, according to Financial News Online.
Currently, AA pays pensions based on members’ average earnings throughout their careers, rather than their final salary. AA wants to alter its pension to make it less expensive.
To contact the <em>aiCIO</em> editor of this story: Kristopher McDaniel at <a href='mailto:kmcdaniel@assetinternational.com'>kmcdaniel@assetinternational.com</a>