Saga (LON:SAGA), the cruises-to-insurance group for the over-50s, could cut retirement benefits for its workers, The Sunday Times has revealed. The mid-cap company is one of only a handful of employers left allowing new workers to join a defined-benefit retirement scheme. Royal Mail Group (LON:RMG) is currently facing opposition from a union to its plans to replace its own DB scheme with a cheaper alternative.
Saga’s share price was little changed on Friday, closing 0.01 percent lower at 192.68p. The group’s shares have lost some four percent of their value over the past year, and are down by a little over one percent in the year-to-date.
Saga plans to cut pension scheme
The Sunday Times reported yesterday that Saga was pondering watering down payouts for its 5,000 staff in an effort to fill a £19-million deficit in its gold-plated pension plan. The payments they receive in old age are linked to average earnings over their time at the lifestyle group. Under the changes, Saga could put a ceiling on benefits, or force workers to make cash contributions to retain their current benefits.
Sources, however, indicated to the newspaper that the mid-cap group had no plan to close the scheme to new workers. The Sunday Times noted that Saga had declined to comment while the “consultation process with its employees is ongoing”.
Analysts on Saga
The eight analysts offering 12-month price targets for Saga for the Financial Times have a median target of 230.00p on the shares, with a high estimate of 240.00p and a low estimate of 210.00p. As of October 20, the consensus forecast amongst 8 polled investment analysts covering the mid-cap group has it that the company will outperform the market.