Posted by Current Employee on 12 October 2000 at 11:21:02:
In Reply to: Risk and Defined Benefit Scheme posted by employee on 11 October 2000 at 13:02:21:
The effect of variable pay was explained to me in some detail by my manager last year. An assumption
is made that a 10% bonus will be paid when the manager determines the employees position on their pay
scale. This effectively reduces base salary, and pensionable earnings, by 10% compared to the position
before variable pay was introduced. This can make quite a hole in your pension planning calculations!
: It is of course spurious for the company to claim that it bears the risk.
: The employee bears the serious risk that the company will redefine what the definition of
: pensionable salary is. We have seen this with London allowance and the policy of variable pay in
: which 10-15% of annual earnings are deemed non-pensionable. What happens to my pension planning if this
: capriciously increased to say 40% or 50% of salary.