December 7th, 2018

On Thursday 22nd November we formally presented our counter proposal to the Company. Roddy Thomson attended this meeting to hear our counter proposal in person and also provided the response from the Company on Thursday 6 December.

Before presenting the response from the Company, Roddy reiterated the rationale behind the changes, and made it clear that while fairness between DB and DC members is one of the drivers behind the proposals, managing both the current and future costs of the scheme was also important. While the Prudential scheme is currently in surplus, it has to be sustainable in the future too. We understand that there is a balance to be had between protecting member’s benefits and protecting the Company. While we don’t always agree with what the Company does, everyone at Unite wants Prudential to be successful too.

In order to get your thoughts on the revised proposal from the Company in a timely manner, we have created a survey for all members to complete, which has been emailed out to all current members. The full details of our counter proposal (in italics) and the Company response are as follows:

Defined Contribution

We propose that the Company contributes 8% but continues to match contributions up to 6% and not 4% as the proposal currently states. This will mean that DC members contributing 6% will receive a total Company contribution of 14%, bringing the total to 20%. This means all staff in the DC scheme will get equal benefit from the proposals and an enhanced benefit compared to the current arrangements.

We are pleased that the Company has agreed to match up to 5% from the original proposed 4% and will mean that the maximum employer contribution will be 13% from the proposed original of 12%. This ensures that every DC member will see a better retirement outcome than they do at present.

Those who currently contribute 6% will get an extra 1% contribution into their pension than they do currently, or they will have the option to drop their personal contribution to 5% and get the same total contribution into their pension that they do now.

Defined Benefit – all schemes

We propose that:

• The proposed changes are implemented after 1 April 2019 to ensure that the 2018 salary review is included.

We are satisfied that the Company has agreed to move the date from 31 March 2019 to 30 September 2019 to align more with the demerger activity, gives individuals more time to consider their options and it will also ensure that any salary increase before 30 September 2019 will be included.

PLUS

• The proposed cap is only implemented once an individual reaches 75K base salary. This protects the lower earners and ensures a reasonable retirement for the majority. The cap would be reviewed annually to ensure that inflation is taken into consideration.

The Company have agreed to protect those on the lowest salaries by setting a base salary of 30K before capping pensionable pay. While we are satisfied that this protects the lower earners, we are extremely disappointed there is no protection for the middle earners. The majority of members will still be significantly disadvantaged financially by this revised proposal. We are also frustrated that there has been no inflation proofing in this element, meaning the value of the cap will reduce in real terms over time.

AND/OR

• Rather than pensionable pay being completely frozen, increases in pensionable pay (annual salary review, promotion etc.) are capped at the higher of RPI or 50% of any salary increase. This will provide some degree of inflation protection to currently accrued benefits, reward staff and counter any retention issue while protecting the pension fund from sudden large increases in liabilities.

We are extremely disheartened that this option has not been considered and feel this is extremely short-sighted. There will be no incentive to those impacted to progress or to excel and we feel DB members will become disengaged from the whole performance management process. There is also the huge risk of experienced and valuable individuals leaving the Company.

PLUS

• All DB members to receive an ex gratia payment of £2000 towards the cost of financial advice, to help them understand how the changes affect them personally and to help decide whether to stay in the scheme or opt out.

The Company are committed to supporting provision of advice of some form to all members of the DB schemes and they are working through what this looks like at the moment, however this will not amount to £2000 per member. We are pleased that the Company agree that financial advice for individuals is important and will support this in one form or another. We will continue consulting with the Company on what form this should take.

• Matching contributions to AVCs – similar to DC scheme matching

This will not be considered by the Company. While we understand the rationale behind this, it’s still disappointing given we are a considerable distance apart on the other proposals.

• Removal of the 4% employee contribution to the M&G scheme once the pensionable cap is reached or added to AVCs

This will not be considered by the Company. Again we understand the rationale but our members will be disappointed that they still have to contribute to a scheme where there is a pensionable earnings cap in place.

• GHO/CP – current proposal for employer contributions is not acceptable – also there is concern from this population that they are being forced out of the DB scheme prematurely when the demerger has yet to happen. There is also a huge concern that these individuals have no form of collective representation.

We are satisfied that the proposed date has been moved to 30 September 2019 to align more with the demerger and whilst these individuals will be without the DB scheme we are pleased with the level of Company contributions going some way to mitigating this loss of a valuable benefit.

Original proposals: Year 1 – 16%, Year 2 – 15%, Year 3 onwards – 12% + 1% matching

Updated proposals: Year 1 – 24%, Year 2 – 16%, Year 3 – 16%, Year 4 onwards – 13%* + 1% matching

*Increase is in line with the higher proposed maximum employer contribution for DC members

THE CLOSING DATE FOR THIS SURVEY IS 11AM ON WEDNESDAY 12 DECEMBER.

The short timescale is to ensure that all your answers and comments are taken to the next consultation meeting on Thursday 13 December where we will present a revised counter proposal.

The consultation period will formally close on 15th December. Once we know the Company’s final position we will of course come back to members and ask you to vote on the final position. At that point we will consider if any further action is necessary, which could include speaking to the media or industrial action.

As ever, the more members we have, the stronger our collective voice. Please feel free to pass the link to this website on to your colleagues and friends who may not be members – should non-members wish to sign up they can click on the Join the union page . It is worth mentioning that only members will be able to vote to accept or reject the final position from the Company.

If you have any questions please email Unite@prudential.co.uk or speak to your local rep.

Claire Williams, Chris Russell & Stephen Newton

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