BP will close its £11bn final salary pension scheme to new entrants from April next year in an attempt to cut growing costs.
The oil group told UK staff yesterday that anyone hired from April 2010 would only have the option of joining a defined contribution scheme, although the 12,000 employees who belong to the existing final salary scheme would not be affected by the change.
The announcement comes as part of a new benefits package announced for UK staff, which includes a new car purchase scheme, a new health screening programme and a company health insurance scheme.
A BP spokesman told Personnel Today that the move to the defined contribution pension would save “hundreds of millions of pounds” in annual savings by 2019. Last year, the BP pension scheme had a surplus of £1.58bn, but in the first quarter of 2009 the cost of funding the scheme rose to £222m from £148m in the same period for 2008.
“We realised there was a need to change the scheme to deal with a growing pensioner population that was supported by a static working population,” he said.
“The new defined benefit pension will be more flexible to newer employees who may prefer smaller pension contributions to be able to put more of their money into their mortgage.”
A survey earlier this year by the National Association of Pensions Funds found half of companies expected to close final salary schemes to new members in the coming years.