Whilst the changes have seen the closure of the existing defined benefits (DB) scheme to new employees; and an end to the build up of new defined benefits for existing employees; a new defined contribution pension arrangement (DC) has been introduced for service from this month (July 2011), in partnership with Standard Life.
Heineken UK commenced a detailed review of UK pension provision in November 2009. This review covered the Scottish & Newcastle Pension Plan, a DB scheme, which includes many legacy categories arising from previous acquisitions (including Scottish & Newcastle, Courage, and Bulmers).
In 2009, the Scottish & Newcastle Pension Plan reported a funding gap of £570 million.
The company has already committed to a 12 year recovery plan, which involves additional Company contributions starting at £30 million this year and rising to as much as £61 million each year by 2014.
Following the recommendations of the review, an authentic employee consultation was undertaken. Valuable input was provided by the Heineken Employee Council, in addition to feedback made by individual colleagues through the many mechanisms put in place.
The final arrangement included some significant enhancements from the outline proposals, thanks to this process.
Once the decision to go to DC had been confirmed through consultation an extensive and wide ranging employee engagement programme was put in place, resulting in an active sign up by around 95% of the eligible employee base and strong positive employee feedback on the support process and the revised offering.
Robin Pring, HR director of Heineken UK, said: "In common with many businesses across the UK, we face challenges to manage our long term pension commitments and to ensure that we have a sustainable & secure pension scheme for all stakeholders. In simple terms, increasing life expectancy, changes to legislation and investment and inflation volatility meant that the current arrangements were not sustainable.
"Whilst the closure of our defined benefit scheme was disappointing news for many, I am confident that we have put in place a competitive and flexible DC scheme to replace it.
"We now have a scheme that is attractive, sustainable and in the best interests of all pension stakeholders - including deferred and retired members."
Heineken has said the new arrangements have no impact on existing pensioners or those who have deferred benefits arising from previous schemes. All benefits earned to date in the current scheme are preserved by legislation, including those earned by existing employees.
Employees can choose to exchange from a base of 3% of salary and will be double matched by the company to a maximum of 12%.
The scheme will include Death in Service Cover of seven times pensionable salary; and ill health protection worth 50% of pensionable salary - plus 15% pension contributions until normal retirement date.
The DC arrangement has been designed to meet the rigorous "Pension Quality Mark Plus" standards as set out by the National Association of Pension Funds.
The new arrangements took effect from 9 July 2011.