FINANCE NEWS: Sector cautioned over final-salary pension schemes

Charities have been warned not to panic into switching from final-salary pension schemes to money-purchase schemes.

Third Sector revealed last week that large charities such as Age Concern and Save the Children have restricted their final-salary schemes to existing members of staff, offering new employees money-purchase schemes.

But lawyer Robert O'Donovan, partner with RadcliffesLeBrasseur, urged the sector not to make hasty decisions. "Pensions are a long-term staff benefit. Charities should not rush into decisions,

he said.

O'Donovan warned that if those charities moving to money-purchase schemes match the contribution levels of final-salary schemes they could lock themselves into contributions at an all-time high.

And contributions to money-purchase schemes are difficult to cut back as it is much more visible, akin to a pay cut, said O'Donovan.

Workshop, p18.

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