09 November 2006
The Royal Opera House has warned hundreds of staff that its
final salary pension scheme may be closed to both existing and new
members.
The scheme's deficit has risen to more than £8m, and a
recent letter to employees said if no action was taken the Royal
Opera House (ROH) would have to increase its contributions from 15%
of staff salaries to 26%. The director of personnel at the ROH,
Elizabeth Bridges, said in the letter that a big rise in employer
contributions was "not a financially viable option for the
ROH".
Despite the ROH raising its own contribution rate twice since
1998 - from 9% to 15% - the pension scheme deficit has grown from
£6.4m in 2003 to at least £8.2m now. The ROH blamed
this on increased longevity and falling investment returns.
The opera house management is currently consulting with staff
and their trade union BECTU and says it would prefer not to close
the scheme to its current members. Closing the scheme to existing
members would be extremely expensive as current legislation says
that solvent employers cannot do this unless they make good any
deficit.
The second option on which the ROH is consulting involves
closing the final salary scheme to new employees, who would be
offered a money purchase scheme instead. Existing scheme members
would have to pay more than their current contribution rate of 6%,
and would also face a cap on the extent to which future salary
increases are pensionable. The extent to which pension payments can
be increased would also be restricted.
