Business Insurance reports that a Marsh Ltd. spokeswoman said the changes were the result of “continuing pressures on pension funding” caused by “increased life expectancy, lower-than-anticipated investment returns, and greater regulation in the UK and more stringent accounting standards in the US.”
In its annual report for 2004, Marsh & McLennan Cos. Inc., the ultimate parent of Marsh Ltd., said its “significant” non-US pension plans were underfunded by $1.12 billion and estimated it would pay about $163 million in non-US pension benefits in 2005, according to Business Insurance.
The career-revalued plan will base benefits on participants’ salaries during all years of employment. The value of the pension is increased for inflation up to a 5% cap each year. Marsh said the new plan will go into affect April 1 and will not affect benefits accrued up to that date.
In addition, Marsh Ltd. said a supplementary benefits pension plan that previously was available to middle managers will only be available to very senior staff in the future.
The company said all employees will be eligible for a new flexible benefits plan, which will require changes to employees’ contract terms. Any employee who does not sign a new contract will have their existing contract terminated April 1, and a new contract will be issued. The company said 99% of the UK staff have already agreed to a new contract.