UK - WHSmith Pension Trust has closed its final salary scheme and will be transferring the scheme's active members to a defined contribution plan.
WHSmith claimed it had "made efforts" to save the final salary scheme and contributed £282m to it over the last four years. The company had also agreed to pay an additional £10m into the scheme over the next five years to fund the deficit.
The scheme’s current shortfall is of £41m and the company said it had an "obligation to its current and future pensioners to ensure the health of the scheme does not deteriorate again".
In support of the decision, the company said in a release: “The long term costs of running a final salary pension scheme continue to be high and difficult to predict, mainly due to low investment returns and members living much longer.”
The future pensions for the final salary scheme members - which constitutes 11% of the WH Smith workforce - will be provided through a money purchase arrangement, or defined contribution scheme in which the amount of contributions received by the employees is proportionate to their wages.
Therefore, employees’ pensions going forward will be based on the contributions made, investment returns and the cost of buying a pension upon retirement.
The company stressed the proposed changes will not affect the existing pensioners drawing pensions from the final salary scheme.
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