Rentokil Initial has announced plans to close its final salary pension scheme, which would freeze the benefits for current employee members, in a bid to cut costs.
The safety and security firm would be the first FTSE 100 company to close a final salary pension scheme to existing staff. The guaranteed benefits of the scheme would remain at current levels.
Rentokil’s chief financial officer Andrew MacFarlane told the Financial Times that the company had to control the risk of its pension costs soaring in the future.
“In relative terms we have one of the largest deficits in the FTSE 100. Although we have the financial capacity to deal with the deficit now, we had to make sure that another deficit does not arise in the future,” he said.
Rentokil’s current UK pension deficit is estimated to stand at £325m. The total deficit among all FTSE 100 companies is estimated to be about £40bn.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
Many other firms are expected to follow suit, according to the National Association of Pension Funds.
Rentokil said it would make a decision on its final salary pension scheme after consulting with its 3,000 members next year and looking at alternative schemes.
