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.
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.
