Friends Provident plans to close its defined benefit (final salary) pension scheme to new employees from July next year and increase the staff retirement age, the company has announced.
The insurance firm said it would maintain its defined benefit scheme for existing members, although they would have to choose whether to pay increased contributions, or raise their retirement age from 60 to 65.
The firm outlined its plans after consultations with union Amicus and pension fund trustees.
Keith Satchell, chief executive, said: “We have been working closely with Amicus and the pension scheme trustees for some months and are now entering a new phase of consultation with employees about the changes planned for mid-2007.”
Friends Provident said current final salary contributions, around 3% of salaries for members, would have to rise by 1 percentage point a year to 7% in 2010 for employees to keep the pension age at 60.
New employees joining the company from July 2007 will have a defined contribution pension scheme, with a higher employer contribution rate of 8%.
Amicus said it was completely opposed to the closure of the final salary scheme to new entrants.
Friends Provident is the latest UK firm to have closed its final salary pension schemes to new staff in recent months.