Watchdog may abandon final-salary

THE Consumers' Association is facing severe embarrassment over the possible closure of its final salary pension scheme to employees.

The watchdog's director, Sheila McKechnie, has frequently championed the cause of pensioners.

But the association's pension fund assets have been hit by falling stock markets.

Under the controversial FRS17 accounting standard, which gives a snapshot of a company pension, the association's fund had a deficit of nearly £8 million in the year to last June. Its total assets fell from £48 million to £43 million.

The association's Allan Asher told Financial Mail that the organisation has started formal consultations with its 550 employees. 'We are not facing this with alarm,' he said. 'Anything we do will be about securing retirement incomes of staff, pensioners and former employees who will claim on the scheme.'

Asher said the association expected to make a decision on the scheme's future early next year.

But he said the organisation would not be looking to ditch final-salary benefits to save money.

He stressed that the association had reserves of more than twice the pension fund deficit so would be able to cover any shortfall.

Contributions would be maintained at the current rate if an alternative money purchase pension scheme was set up, he added.