AA has launched a consultation with its final salary scheme members to revalue benefits in a career average section.
The proposal is aimed to reduce expected future costs of the firm's UK scheme while maintaining a defined benefit (DB) scheme which remains open to future accrual.
If approved, around 2,000 final salary members would be transferred to a single modified Career Average Revalued Earnings (CARE) segment of the scheme. Another 2,500 members are already part of the CARE section.
The firm stated the proposal would mitigate risk of increased pension costs to the business, reduce its exposure to risk, allow it to remain competitive, and create a more consistent pensions provision for its employees.
As of 31 January 2017, the UK scheme had a £325m deficit on the IAS 19 accounting measure, up from £238m last year. It had assets totalling £2.2bn, compared to liabilities of £2.5bn, increasing from £1.8bn and £2.1bn respectively.
The scheme is currently undergoing negotiations for its 31 March 2016 triennial valuation, with a full agreement expected to be reached by 30 June this year. Preliminary results suggest its deficit has increased from the £202m at the 31 March 2013 valuation.
Depending on the outcome of the 60-day consultation, which launched on 20 March, the changes will be taken into account when agreeing the scheme's recovery plan.
The Independent Democratic Union (IDU), the main trade union for AA employers, welcomed the proposal against the backdrop of many other private sector DB schemes closing entirely.
General secretary Alistair MacLean said it was pleasing employees were not taking on the pension risk.
"The change the company is proposing is substantial," he said. "However, we have been successful in ensuring that the company puts in a DB scheme which still maintains the risk with the employer.
"When we look at changes taking place with many companies across the UK, a lot of them are moving towards defined contribution. In that respect, we are pleased where we are.
"We'll be in discussions with the employer over the next 60 days to seek certainty. The big issue is what is pensionable, and that's the part we'll be concentrating on."
AA had not responded to a request for comment at the time of publication.
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