Coronavirus: Deloitte in talks to slash pension contributions
The big four accountant wants to reduce employer pension contributions for the next year, Sky News learns.
Tuesday 5 May 2020 10:31, UK
Deloitte, the big four accountancy firm, is proposing to slash pension contributions for thousands of UK staff as it seeks to maximise cost savings during the COVID-19 pandemic.
Sky News has learnt that Deloitte has launched a consultation on the issue in the last few days, underlining the financial strain that even the largest consulting groups believe the coronavirus outbreak will place on their businesses.
Sources close to the situation said the firm was exploring whether to reduce the maximum employer pension contribution from 12% of an employee's salary to 4.5%.
One insider estimated that if it went ahead, it would save tens of millions of pounds during the 12 months that the reduction would be in place.
If it goes ahead, it would affect the majority of Deloitte's 19,000 UK staff - although not hundreds of equity partner who are not eligible to join the firm's pension scheme.
A Deloitte spokesperson said: "We've been closely monitoring and managing the COVID-19 situation and supporting our people and clients is a priority.
"We are doing all we can to protect jobs and our business in the coming months.
"As part of this we have started a consultation with our people on temporarily reducing our maximum employer pension contributions."
The pension cuts come on top of measures announced last month by Richard Houston, Deloitte's UK boss, which included deferring profit distributions and an expected 20% decline in partners' annual earnings.
Annual pay increases have also been cancelled, while the number of bonuses and promotions at the firm this year would be delayed and reduced.
Deloitte is not alone in taking the axe to employees' pay and benefits during the pandemic, even as it lands prominent contracts from the government to help manage the public sector's response to it.
Last month, Sky News revealed that Bill Michael, the UK chairman of KPMG, had told staff that the COVID-19 crisis risked an "economic disaster" as he set out his firm's plans to navigate it.
Mr Michael, who is himself recuperating at home following treatment in hospital for COVID-19, told KPMG's 18,000-strong UK workforce that they faced "a huge paradigm shift in the way we live and work".
The pandemic has created a major headache for the big four firms - also made up of EY and PricewaterhouseCoopers - because the consequent slowdown in business activity has come at the same time as they are braced for a structural overhaul of their operations.
PwC has said it would delay partner promotions and bonuses, while EY is also cutting pay, but has vowed not to pursue compulsory redundancies.