UK - Brewing giant Scottish & Newcastle has blamed poor contracting-out rebates and rising costs for its decision to close its final salary scheme to new members.
The firm – best known for its John Smiths and Newcastle Brown Ale brands – revealed that its FRS17 deficit has increased from £187.6m at the end of April 2002, to £470m.
The firm is doubling its annual contributions to £80m in a bid to close the gap and introducing a raft of measures. These include closing the final salary scheme to new members in favour of a career average scheme and raising the pension age from 60 to 65.
Accrual rates for members of the career average scheme will depend on their level of contributions.
S&N head of pensions and executive remuneration Ray Martin said: “We do not want to take the risk of running benefits that the state provides and the rebates on offer do not cover that risk.
“So we’ve contracted back in for the career average scheme, which will help control risk, and employees will also have to contribute to it.
“The changes have generally been well received by our employees, and we believe that we’ve reduced the risks of running the plan to the company by 50%, through contracting-in, the career average scheme, employee contributions and raising the pension age.”
The firm has increased benefits for its unmarried workers in a bid to provide fairer benefits across the board.
Around 35% of S&N employees currently receive spouses benefits in addition to their own, and Martin said that going forward, single people will be offered higher pensions to compensate for that.
Once they retire, they will have the option of trading in that extra pension in exchange for spouses benefits, he said.
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