UK - Scottish and Newcastle (S&N) has announced plans to retain its final salary scheme for existing members, however from April they will be required for the first time to contribute to the scheme.
Following a period of consultation with employee representatives, it has been agreed members of the final salary scheme, which closed in 2003, will contribute 6% of pensionable pay.
It is believed the changes will affect approximately 3,500 of S&N’s 6,600 UK staff, all of whom were existing final-salary scheme members. 2003 actuarial valuations had placed S&N’s pension deficit at approximately £400m.
Employees who joined after 2003 had the opportunity to join a career average DB scheme, which, according to S&N doesn’t compel contributions and will not be affected by the changes.
A spokesman for the company said: “The final salary pension scheme is unsustainable in its present form. We have had the same difficulties as everybody else with stock performance.”
In recent years S&N had made significant attempts to stem the £400m deficit. In 2004 it contributed a one-off lump sum of £200m and has recently committed itself to injecting £26m every year for the next 11 years.
John Dunsmore, managing director of S&N UK, said: “It is well documented that final salary schemes are under threat in businesses across the UK. I am therefore delighted that we have been able to find a solution that retains the final salary scheme for those who wish to remain with it.”
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