Cash bribes, pressure selling and ultimatums are just some of the tactics used by companies to persuade their staff to ditch generous final salary pension schemes.
A cash lump sum is typically offered in exchange for final salary pension benefits built up over many years. In most cases it means workers will be worse off in retirement.
The benefits of final salary schemes are considerable – the pension is guaranteed, based on length of service and salary on retirement. But unlike other pensions, final salary schemes provide protection against inflation, falling annuity rates and stock market movements.
Employers want to ditch final salary schemes because increased life expectancy means they have to pay out for longer. And a poor investment performance means employers and employees need to contribute more.
The Pensions Regulator has found evidence of underhand tactics, which include cash bribes; pressure and ultimatums to make a decision; inaccurate or incomplete information provided to members; sales tactics such as claiming they are making a special offer for a limited time; and pestering former staff with phone calls at home.Pension expert Robert Reid, from Syndaxi Financial Adviser, said : 'Employers are doing this to save money and workers are being shafted. Appealing to people's need for immediate cash while damaging their long-term future is reprehensible.'