Marks & Spencer is to revamp its final salary pension scheme in an attempt to plug a £704m deficit.
The retailer said its scheme would remain open to existing members, but they would have to make contributions from their salaries or receive lower benefits on retirement.
Up until now, M&S staff earned the right to one-45th of their final salary in the form of retirement income for each year of service. Workers have not had to make any contributions from their salaries.
But now pension scheme members will have to choose one of the three following options:
- Start making pension contributions from their salary; contributions will rise to 7% over the next three years
- Do not make contributions but as a result accrue benefits at a slower rate
- Do not make contributions but agree to a limit on the rate at which their pensionable salaries rise.
An M&S spokeswoman told BBC News that it had to act. “There is no do nothing option here, we have a £704m deficit and it has to be funded.”
At present, there are 123,000 members in the M&S pension scheme, with 26,000 of these current staff.