UK - Rentokil Initial have confirmed they will set up a DC pension plan to replace their existing DB scheme.
A spokeman for the FTSE100 company confirmed there “will be a DC scheme” put in place for the 3000 active member employees who have had their current DB schemes frozen.
The period on consultation, which has been touted to continue well into 2006, will be used as a platform to discuss the nature of the DC scheme to be put in place.
The spokesman said: “But what form will it [DC] take? It’s the whole process and issues surrounding closing the DB and what’s going to replace it.“
Rentokil Initial decided to freeze its pensions to plug its estimated £325m deficit (under IAS 19). An agreement has been reached between the company and the trustees to make an immediate payment of £200m, with the remaining deficit being met by a series of payments ending no later than January 2012.
Commenting on the news, a spokesman for the National Association of Pension Funds (NAPF), said it hadn’t come as a surprise.
“It’s probably the first FTSE100 to do it but we suspect it wont be the last,” he said.
“We already said that 70% of private sector final salary schemes have closed to new employees and what we would see is growing numbers closing to existing employees for future recruals and that’s clearly what Rentokil have announced.”
The total current deficit for FTSE100 schemes is 59.9bn according to consultants Watson Wyatt.
The top stories this week were the High Court's decision to block the £12bn annuity transfer from Prudential to Rothesay Life, and a separate court ruling that 'raises the bar' for pension rectification exercises.
Guaranteed minimum pension (GMP) equalisation has soared to the top of pension schemes' to-do lists, with 58% stating it is a priority project, research from Equiniti has revealed.
Professional Pensions is holding its defined contribution (DC) conference on 4 September.