American Express? That won't do nicely

Amex workers in the UK will count the cost of its decision to stop paying into its employees' pension scheme contributions

I have been warning for a long time that the recession will bring with it a fresh round of final-salary pension scheme closures and employer contributions cuts. But I didn't expect employers to go as far as ceasing all contributions, yet last week American Express decided that it cannot afford to pay into its UK employees' scheme until January 2011.

The credit card provider, which employs some 6,000 people in the UK, says this is a temporary measure to cut costs in the face of the global downturn. The move affects the firm's stakeholder pension as well as its final salary scheme, which was closed to new entrants in 2006. Crucially, there is nothing to stop Amex turning around in 18 months' time, mothballing its current scheme and launching a cheaper pension plan. In fact, Amex, like other employers, won't be compelled to pay into its employees' pensions until the introduction of personal accounts in 2012 – which may never see the light of day. In one respect, in a recession it's good to see employers, employees and unions being flexible and doing what they can to avoid job cuts. It's a key difference from the early 1980s and 1990s recession. However, even under a best-case scenario, job losses will continue for the next year at least, and the pressure on pensions will grow and grow; heaven knows where occupational pensions will be by 2012 or 2013. As for Amex stopping pensions' contributions, to paraphrase its most famous advertising slogan: "That won't do nicely."



Disloyalty incentive

What rewards for loyalty? Well, if you use a particular retailer, car-dealer or airline time and again, you can usually expect a little titbit for coming back, either money off, or air miles or some sort of loyalty card programme. But in financial services, you're treated, frankly, as a bit of a mug. Take student accounts: banks offer lots of freebies and free overdrafts to get youngsters to sign on the dotted line. But against the backdrop of the credit crunch, banks are increasingly reining back on graduate accounts, cutting overdraft limits in double-quick time. A reader emailed me the other day to complain that, having just left university, her overdraft was slashed by her bank – she took out the account on the understanding that, at graduation, her overdraft would fall much more gently and slowly than has actually happened. She is now working in two low-paid jobs, in a scramble to meet the bank's demands. But there is another option: move your account at graduation. The financial information service Moneyfacts has shown, in the first year after graduation, the level of interest-free overdraft on a graduate account ranges from £1,000 up to £3,000, while additional authorised borrowing is charged at between 9.9 and 19.9 per cent. So ditch loyalty and shop around. Remember: the banks want you because you are on the cusp of a career. Play them at their own game.



Direct inaction

HomeBuy Direct, the Government's much-vaunted shared equity scheme designed for first-time buyers, has helped a pitiful 215 people into their own homes. Now I know HomeBuy Direct had the gross misfortune of being launched slap-bang in the middle of the biggest mortgage and housing slump in a generation. But 215?

The Government's original target for HomeBuy was 18,000, but the low take-up seems partly due to the fact that it's only available on new-build property, and in a falling market with so many building projects being mothballed, who would buy off-plan?

Independent Partners: 10 top tips for retirement. Get your free guide here

Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
News
Stephen Hawking is reportedly taking steps to trademark his name
people
Sport
Seth Rollins cashes in his Money in the Bank contract to win the WWE World Heavyweight Championship
WWERollins win the WWE World Heavyweight title in one of the greatest WrestleMania's ever seen
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Retirement Coordinator - Financial Services

    Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

    Recruitment Genius: Annuities / Pensions Administrator

    Negotiable: Recruitment Genius: You will be the first point of contact for all...

    Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

    £18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

    Ashdown Group: Learning and Development Programme Manager

    £35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

    Day In a Page

    No postcode? No vote

    Floating voters

    How living on a houseboat meant I didn't officially 'exist'
    Louis Theroux's affable Englishman routine begins to wear thin

    By Reason of Insanity

    Louis Theroux's affable Englishman routine begins to wear thin
    Power dressing is back – but no shoulderpads!

    Power dressing is back

    But banish all thoughts of Eighties shoulderpads
    Spanish stone-age cave paintings 'under threat' after being re-opened to the public

    Spanish stone-age cave paintings in Altamira 'under threat'

    Caves were re-opened to the public
    'I was the bookies’ favourite to be first to leave the Cabinet'

    Vince Cable interview

    'I was the bookies’ favourite to be first to leave the Cabinet'
    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat
    Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

    Saudi airstrikes are fuelling the Gulf's fire

    Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
    Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

    The only direction Zayn could go

    We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
    Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

    Spells like teen spirit

    A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
    Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

    If fashion is a cycle, this young man knows just how to ride it

    British designer Jonathan Anderson is putting his stamp on venerable house Loewe
    Number plates scheme could provide a licence to offend in the land of the free

    Licence to offend in the land of the free

    Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
    From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

    From farm to fork in Cornwall

    One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
    Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

    Robert Parker interview

    The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
    Don't believe the stereotype - or should you?

    Don't believe the stereotype - or should you?

    We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor