Harrods has become the latest company to axe its final salary pension scheme after announcing a deficit of £111m.
The luxury retailer told 1,500 scheme members that their pension arrangements would change from 6 April this year. A money-purchase scheme will replace the final salary plan, according to the Transport and General Workers Union (T&G).
Madeline Richards, a representative from T&G said the union would be holding an urgent meeting with Harrods to discuss the implications for its members.
“This has come as big shock to our members and they are extremely concerned for their future,” said Richards.
Richards said staff were told about the changes in a letter, which outlined the new contribution levels. Under the new scheme, the company plans to contribute 4%, with employees contributing 2%. If employee contributions reach 5%, the company will put in 8%.
“What is proposed is an almost halving of employer contributions from the current 15% maximum,” said Richards.
The Harrods pension scheme has 6,541 members.
Harrods has said the decision was “not taken easily”, and that a new money-purchase scheme will be introduced.
A Harrods spokesman said: “This proposal intends to secure the current entitlements while negating the risk of further potential deficits in the future.”