Marks & Spencer and Whitbread are the latest large employers to reveal
plans to axe their final salary pension schemes.
M&S has announced a review of its pension fund benefits and is planning
to stop the existing scheme, which has 59,000 members, within the next few
months.
The company has not yet decided what type of pension will replace its
non-contributory final salary scheme.
M&S spokeswoman Jane Low said the firm had taken the decision to review
pension provision to reduce its fund liability and provide more protection
against investment performance.
She stressed that none of the 40,000 members in the existing scheme will be
affected, and the options will only be offered to new recruits.
The Whitbread group is set to reduce its pensions bill by closing its £1.2bn
salary-linked scheme on New Year’s Day and offer new staff the choice of a
purchase scheme or stakeholder pension.
The group hopes this will reduce company contributions to as little as 3 per
cent of salary – down from 10.9 per cent under the current scheme.
Whitbread spokesman Jeremy Probert said, "A money purchase scheme is
more suited to our company because we have a lot of young workers and people
who are not exactly transient, but who don’t necessarily stay forever."
The measures are also in response to tough FRS 17 accountancy rules which
force firms to take the full cost of pensions into their yearly accounts.
Lloyds TSB and Sainsbury’s have already closed their final salary schemes
due to concerns over this potential cost burden.
By Phil Boucher
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