That won’t do nicely

American Express has elected to suspend its employer contributions to its stakeholder pension scheme from 1 July for a period of up to 18 months. It is also believed to be looking at other cost-cutting measures.

The stakeholder scheme is the one to which most of the 6,000 American Express employees in the UK belong; only a small number are in a final salary scheme which closed to new entrants in 2006 but which is also affected by the move. The stakeholder has a core contribution level of 3% but the company matched employee contributions up to 6%.

The 18 month freeze on contributions takes American Express into 2011, just 12 months before the commencement of the system of personal accounts to which the minimum employer contribution is also 3%. Whether American Express chooses in 2011 to reintroduce employer contributions into the existing stakeholder scheme on the pre-1 July basis, or look instead to fold this into a personal account, is a moot point.

American Express – whose Platinum Cashback Credit Card, according to its own website, charges an APR of 18.9% – said that payments to the scheme were ‘unaffordable in the current economic downturn’. The move to cut contributions follows a similar move made by its US parent earlier this year. The company made a profit of $443m in the first three months of 2009.