The Channel

Ex-EDS bod at DXC Technologies? Sign up to new pension scheme - or else...

Don't agree to new terms? No salary or bonuses for you

By Paul Kunert


Exclusive Frankenfirm DXC Technologies is proposing to kill off the final salary pension scheme for former EDS staff and will refuse to fund pay rises and bonuses to those affected who do not sign over to the new package.

This will impact 99 active members of the EDS 1994 pension plan and 1,119 people that are on the EDS Retirement Plan. A two-month consultation about the recommended changes began on 1 September.

In a mail to staff – seen by The Register – UK and Ireland boss Nick Wilson confirmed that impacted employees will no longer build up a Defined Pension benefit.

“With effect on and from 1 December, you would be automatically enrolled and have the opportunity to build up Defined Contribution benefits… this would put you on the same terms for future pension build-up as most other Enterprise Services employees.”

The EDS Retirement Plan built up to the date of closure would be calculated as a proportion of employees’ final pensionable salary as of the start of December, and after that date, the increases would be based on the Consumer Price Index in line with UK law.

Under the new Defined Contribution plan, staff will pay between 3 and 7 per cent of their annual salary into the pot. DXC will match this from 3 to 6 per cent.

Should the current proposals be passed, staff will be forced to fall in line.

“The company would intend that until you do sign the document, you would not receive any future increases in your basic or gross pay (including bonus, commission and overtime),” Wilson added in his email.

The reason for ending the Defined Benefits scheme is to clip the “costs and risks” of running final salary schemes, DXC said. This is related to increased life expectancy, historic low interest rates which mean employers are paying more to “compensate for this”, and pension legislation and regulations that “add to the burdens on pension scheme administration”.

Wilson said that as a tech services outfit, “we are constantly competing for business and clients in a competitive marketplace. Paying for more generous benefits than are provided elsewhere in the market makes us less competitive and affects our ability to grow”.

DXC was born on 3 April – it was a corporate mash-up between CSC and Hewlett Packard Enterprise’s Enterprise Services arm (which previously acquired EDS). DXC has since put 900 people at risk of redundancy, though we understand it may have now backtracked on the number of people it wants to exit.

The business is forecasting cost cuts of $1bn in its first fiscal year through a combination of redundancies, real estate and data centre closures and offshoring.

The Public and Commercial Services (PCS) union has attended a briefing with the DXC Labour Relations team and, according to documentation seen by The Reg, has told impacted staff that DXC wants a “meaningful consultation”.

“All questions and proposals/ counter suggestions will be looked at carefully,” the PCS claimed in its communication to staff.

The union concurred that DXC is “not obliged” to fund pay rises or bonuses until the Defined Contribution paperwork is signed.

This follows UK government changes that have made it easier for companies to reduce their pension obligations under the “New Fair Deal Policy”.

“In summary, HMG (Her Majesty’s Government) are seeking to drive down costs [for employers],” said the PCS.

Gold-plated final salary pension schemes went the way of the dodo for many Brits in the past decade, and now EDS staff will also likely feel the bite in the not-too-distant future.

DXC has yet to send a statement to us. ®

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