O2 has informed staff of how forthcoming pensions legislation will affect their pensions.
It wanted to make sure that staff who could be affected by the lifetime allowance of £1.5m knew about the new rules.
In August 2003, the mobile phone firm wrote to all staff earning £80,000 or more a year and asked them to complete forms authorising it to collect pensions data from their previous employers. Employees that didn’t respond were chased for the information after three months.
Tina Clayton, head of group pensions at O2, said that the organisation was certain that that the lifetime allowance would be included in the Act, so it wanted to make a head start. Beginning the process early had huge advantages for the organisation. “We got in early hoping for a better inflow of information.”
As A-Day approaches (6 April 2006), this information will take longer to process because schemes will become inundated with requests from previous employees.
Clayton added that the early start was paramount because the lifetime allowance limit is just one element of pensions simplification that needs to be addressed.
It also ensures that O2 has sufficient time to consult with all the bodies that should be involved in the process such as scheme trustees and remuneration committees.
The firm aims to have completed the process by next summer, leaving the nine months leading up to A-Day free to implement and communicate the changes.
Ian McQuade, a senior consultant at pensions consultancy firm Dunnett Shaw, explained: “The more information you have, the more you will be able to communicate with [scheme] members about their pension. The problem is if scheme members don’t [know about the changes] they may well think that they are not affected and get a nasty shock when they come to retire.”