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Personnel Today

‘Costly’ scheme gets cold shoulder

by Personnel Today 19 Feb 2002
by Personnel Today 19 Feb 2002

Food retailer Iceland is to terminate its final salary pension scheme in a
bid to cut costs.

The supermarket claims its ‘challenging’ financial situation means it cannot
afford a final salary pension scheme.

The company is currently consulting over the move that affects 4,400
employees.

These staff will join the 25,600 under a pension scheme with no guaranteed
final payout.

In a letter to staff, Iceland chief executive Bill Grimsey said the company
could not afford to maintain the final salary pension scheme.

A spokesman for the company said: "These old [final salary]
arrangements are expensive to maintain, unpredictable in terms of cost, and
absorb over one-quarter of the group’s profits."

The T&G union claims the move will hit staff morale and undermine
attempts to improve service.

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Mike O’Leary, a spokesman for the union, said: "Any downfall in the
present value of the company is a direct result of the existing management and
they must shoulder the responsibility of the situation. This decision will
create a demotivated workforce with no incentive to deliver the best quality
service."

Other large employers have scrapped their final salary pension schemes,
including Lloyds TSB, Sainsbury’s and ICI.

Personnel Today

Personnel Today articles are written by an expert team of award-winning journalists who have been covering HR and L&D for many years. Some of our content is attributed to "Personnel Today" for a number of reasons, including: when numerous authors are associated with writing or editing a piece; or when the author is unknown (particularly for older articles).

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