Marks and Spencer (M&S) has announced proposals to close its UK defined benefit (DB) scheme to future accrual as it sets out a turnaround plan for the business.
The plans for a "fairer, simpler and more consistent approach" to pensions will involve enrolling current DB members into the retailer's defined contribution plan from April 2017.
The company said in its annual financial results on May 25 that it has started consulting with employees on these proposals.
The DB scheme has been closed to new members since 2002 but is currently open to future service accrual.
M&S also revealed plans for a significant base rate rise for qualified customer assistants and pay increased for section coordinators and section managers from April 2017.
While it does not expect these proposed changes to have a significant impact on underlying costs in this year or next year, there will be a £100m-£150m non-underlying charge in the current financial year.
This is largely driven by the DB changes because when active members become deferred members the annual increase in pensionable salary is linked to the consumer price index rather than capped at 1%.
In February M&S announced the DB scheme's 31 March 2015 triennial valuation resulted in a surplus of £204m due to asset outperformance. This was an improvement on the £290m deficit reported in 2012. The sponsor agreed with the trustees there would be no changes to the existing funding arrangements for past service.
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