BT has
closed its final salary pension scheme to new employees but the company has
denied that this is in a bid to cut costs.
The firm’s
£25 billion final salary pension is thought to be one of the biggest in the
country but from this month all new employees will only be able to join BT’s
money purchase pension scheme.
Under
final salary pension schemes the pension an individual receives is based on
their salary at or near retirement whereas with money purchase schemes the
value of the pension is determined by how much is put in and the performance of
the stock market.
A
spokesman for BT, which is trying to reduce its £30 billion debt, told
Personnel Today said the company had made the change because money purchase
pension schemes were better suited to today’s fast moving labour market.
She
commented, “People are moving around much more, working patterns are changing.
Now people expect to have several different jobs during their lifetime and they
are looking for a pension that reflects that. The defined contribution approach
was more appropriate for them.”
The
spokesman said the changes had been made in consultation with unions and claimed
the money purchase scheme would cost BT about the same as the final salary
scheme.
BT is the
second major UK employer to close its final salary scheme to new employees
following ICI, which adopted a similar strategy some months ago.
By Ben Willmott. Click here to respond
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
