Pension increase in 2009 'uncertain'

After three years of inflation-linked rises for RPF and SPS members, the chances of making it four years in succession are overshadowed by the turmoil in world financial markets.

The group noted that CEO Tom Glocer, announcing this year’s 3.9 per cent increase in April, pledged: “Honouring our pension commitments is something we take very seriously and will continue to do so.”

It added: “However, UK pensioners will remember the three lean years between 2003-2005, when increases were stopped and we lost around 7 per cent of our pensions to inflation. Under pressure from the SPS/RPF trustees and the Pension Review Group, the company shored up the pension fund with an injection of capital and agreed to a resumption of increases in 2006. 

“But these remain discretionary and have to be justified each year. The decision on whether any increase can be paid in 2009 will follow a check on the financial position of SPS and RPF as at December 31. If there is a big enough surplus of assets over liabilities, the trustees can recommend an increase.”

With the world credit crunch causing extreme market volatility, there is no guarantee there will be enough, or indeed any surplus from the funds’ investments to increase pensions, the PRG said.

“No decision is expected much before the second quarter of 2009, although it is hoped that if we do get an increase, it will be backdated to January 1, like this year.” 

The PRG wants the company to guarantee annual index-linked increases in the pension. It added:

“We keep in close touch with the trustees and other interested parties and will continue pressing the company to grant its former UK employees what the majority of FTSE 100 final salary pensioners take for granted - the security of a pension which keeps pace with inflation.” ■