The Weird But Creative Ways UK Companies Are Resolving DBS Pensions
As the baby boomer generation may retire at later years, businesses struggle with income and pension contribution issues.
Money isn’t the only thing involved in pensions. Some UK companies seem to think so.
For example, Diageo, an alcohol and beverage company, had invested about £500m worth of maturing whisky into their pension scheme in 2010.
Indeed, that is something for employees to enjoy upon retirement. Or even sell it at higher prices, making them appealing to the rich.
Meanwhile, Dairy Crest in 2013 paid about a warehouse full of cheese. Endless breakfasts and food upon retirement. That’s really something. However, mind the expiration date.
In all else, company liabilities, especially for companies who have chosen to provide a defined benefit scheme to employees, are finding trouble.
With very low interest rates, passing chunks of pensions to insurance companies have been common practice.
Kingfisher, for one, had passed part of its pension load to Legal & General. This came from their employees medical details to help it work out its pensions costs.
Defined benefit pension schemes were designed for people who would live about 10 years in retirement. The economic troubles and gloomy global outlook are forcing most retirees to extend their DBS benefits for about three to four times longer.