Vodafone pension closure likely to be first of many

Vodafone’s move to close its final salary pension scheme to around 4,000 existing employees will be emulated by many more employers, according to consultancy Towers Perrin.

The mobile phone operator sent a letter to staff this week informing them of a consultation exercise, ahead of a planned closure of the defined benefit scheme in April, it emerged today.

The company said it was making the move because of the rising cost of defined benefit pensions, but added that it plans to “substantially improve” the defined contribution pension programme.

Mark Duke, head of pensions at Towers Perrin, said: “The action by Vodafone confirms the results of a poll undertaken by Towers Perrin across over 100 major UK employers.

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Of this group, 85% were expecting to announce significant pension changes in the next 18 months.

“We anticipate that many will take action similar to Vodafone while others will find different ways to mitigate the rising cost of promising a pension to employees.”