The Royal Bank of Scotland (RBS) is restricting its defined benefit (DB) final salary pension scheme in order to control risks and rising costs.
The bank has informed 60,000 staff that pensionable future increases in salary will be capped annually to 2% or at the rate of inflation (CPI), whichever is lower.
It is also reducing the lump sum payable on early retirement for those members opting to take an immediate undiscounted pension.
It has begun consultation the union Unite on these proposals and expect to complete this before the end of November.
Neil Roden, head of HR at RBS, said, “The rising cost of pension provision is an issue for RBS and for all companies at this time. Only one third of our staff are members of the UK defined benefit pension scheme, which we closed to new members in 2006. This is an expensive scheme for our shareholders to fund and a generous one in comparison to the market.
“The reforms we are consulting on seek to strike a balance between reducing the costs and future liabilities of the scheme to the Group, with doing what we can to protect the welfare of existing staff and scheme members. It is a pragmatic and necessary course of action and not a decision the Board has taken lightly.”
In response to the announcement, Rob MacGregor, Unite national officer, said: “This is a body blow to tens of thousands of staff working at RBS. The company intends to cap pensionable future pay rises and promotions at 2% which will erode workers’ pensions over time.
“Unite will support its members in any action they choose to take to defend their pensions. The union will be meeting again with RBS and we expect there to be meaningful negotiations over these changes.”