UK - The Harrods Group's plan to shut its final salary pension scheme to new and existing workers in April 2006 has shocked its workforce, said the Transport and General Workers Union (T&G).
According to the union, the 1,500 current members of the DB scheme have been told that a deficit of £111m has proved too much for the company and so from the next tax year they will be paying into a defined contribution pension plan.
“This has come as a big shock to our members and they are extremely concerned for their future,” said Madeleine Richards, T&G industrial organiser.
According to Richards, staff were told in a private letter that the store will invest £90m over the next ten years, and any further contributions as necessary, to make good any deficit, but added continuing with the scheme represented an “unacceptable future risk.”
A spokesman for the department store confirmed the news but was unable to add much more as the “consultation process is ongoing”.
A spokesman for Harrods Group said: “The proposal intends to secure the current entitlements whilst negating the risk of further potential deficits in the future. Longer life expectancy, low interest rates, higher taxes and low investment returns during the last several years have all contributed to the increased size of funding deficits and the cost of providing future DB pensions.”
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