Debenhams plans to close its final salary pension scheme to new members

Department store chain Debenhams is planning to close its £500m final salary (defined benefit) scheme to new members and stop existing members from building further benefits.

The retailer plans to replace its final salary scheme with a stakeholder scheme provided by Prudential, with contributions of up to 5% of annual salary to be matched by the company.

The proposal is now subject to a 60-day consultation period, a company spokesman said.

Debenhams joins a long list of companies that have closed their final salary pension scheme since the start of the year, a trend that is expected to continue over the next three years.

A recent survey of 115 UK employers, by Aon Consulting, revealed that while 27% offered defined benefit pension schemes to new members, this is expected to fall to 18% in 2009.

The majority of pension schemes in the survey (61%) are currently closed to new members, but remain open to accrual for existing members.

One-fifth (20%) of respondents said they were considering closing their schemes altogether in the next 12 months, and four in 10 (40%) in the next three years.

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