A bit of a debate between myself and someone who's professionally in the pensions field:
Company has a pension scheme. It's in deficit and the company has agreed to pay X Pounds into it for Y years to make up the deficit. The company meanwhile pays in A% per annum of employee salaries.
Recently the way the stats are reported was changed by the company. It rolled up the X Pounds per annum and instead presented it in terms of percentage of aggregate salaries of fund members. Thus rather than report it pays A% of salaries plus X Pounds per annum to the pension fund, it reports that it pays B% per annum of salaries, where B is greater than A and includes the X Pounds.
Perhaps that doesn't much matter one way or the other except that some employees now have the opportunity to change to a different pension scheme. The comparison between the schemes mentions the contribution rate of C% to the new scheme and compares it with the B% for the current scheme. As it happens C is less than B but is greater than A.
In the end they're final salary schemes and so it doesn't make a lot of difference (both schemes are in deficit). I however would contend that the comparison form is misleading and that A% should be compared with C%. The professional insists that the correct and only thing to do is to compare B% with C%.
I can believe that I'm wrong in some technical accounting sense but morally I feel that when employees unversed in these things have a short time to make a decision on such an important issue, this is misleading.
Have I got it wrong? Opinions?
FoFP