UK - High street electrical giant Dixons is closing its final salary scheme to new members.
Dixons is blaming FRS17 for the closure of its £402m fund, which will be replaced by a defined contribution scheme. Chairman Sir Stanley Kalms has described FRS17 as a “stab in the heart of final salary schemes” which was having a “devastating effect” on UK pension provision.
A spokesman for Dixons Group added: “One of the reasons for doing this is that as interest rates have fallen and people are living longer, the cost of funding final salary schemes has increased and become less predictable.”
The flexibility of defined contribution schemes was also cited as a reason for the switch. He would not confirm whether the current contribution rate of 7.4% made to the DB scheme would be maintained on the new DC scheme, but he did expect its annual costs of £15m to remain the same.
The Dixons scheme currently contains almost 10,000 active members.
The Union of Shop, Distributive and Allied Workers (USDAW) - the body that represents shop staff - criticised the move.
A USDAW spokesman said: “A lot of companies are using things like the minimum funding requirement and the slump in the stock market to get out from under these pension schemes. We are pretty sure that they could sustain them if they really wanted to. It is a betrayal of the people who work for them.”
The spokesman added that a lot of companies have taken pension contribution holidays and have been encouraged to do so by government legislation.
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