American Express suspends UK pension payments
American Express, the credit card giant, has announced that with effect from 1 July, it has suspended pension contributions for its UK employees.
The move, which affects 6,000 members, will see payments stopped for a maximum of 18 months.
Many firms have adopted similar measures as the global recession has forced companies to slash costs. However, American Express is the largest company to take such action.
Last week, IBM, the computer giant, said it was considering closing its final-salary pension scheme to current members, affecting over 25% of IBM’s 20,000 UK workforce.
This followed announcements from other blue-chip companies including banking giant Barclays, oil giant BP and supermarket Morrisons, who all announced plans to close their final salary schemes.
In April, the British subsidiary of the US insurance broker Aon said it planned to reduce its pension contributions to cut its costs – saying it needed to be “protected in challenging conditions”.
Meanwhile, the Government is introducing new laws in 2012 to make it illegal for companies to stop paying into their pension funds.
Returning to American Express, the company said: “We have taken the decision to temporarily suspend company contributions to UK pension plans. This took effect from 1 July 2009 and the suspension of contributions will be lifted no later than 1 January 2011.”
“We will continue to keep employees informed regarding whether we will be able to lift the suspension before this date. ”
Net income for American Express in the first three months of 2009 plummeted by 56%, while the amount set aside for credit losses grew by 49%.