Morrisons is to close it final salary scheme to new members in favour of a stakeholder run by HSBC.
The move, marking the demise of one of the larger defined benefit (DB) schemes in the retail sector, means that the fund will close to employees who started work after October 1, 2000 but will remain open for the current 5,500 staff who already participate in the scheme.
All of Morrisons' 40,000 employees will be eligible for the proposed stakeholder scheme as long as they are over 21 and have worked for the company for at least three months. Morrisons will match contributions of up to 5% of the employees previous years P60 earnings.
"The launch of stakeholder pensions legislation has been a trigger for many pension schemes to review their DB strategy," said Mercer's head of investment strategy Andrew Green. "The launch of this new product has catapulted some pension schemes to take decisions now that they hadn't taken before."
With the greater flexibility offered by defined contribution (DC) and stakeholder products many pension funds believe that these schemes will be better for companies who employ large numbers of transient or part-time employees.
"The move to stakeholder or DC pensions is not simply a cost drive but it is also an issue of corporate culture," continues Green. "Employment patterns are changing and in some industries you will see a move towards DC or stakeholder schemes."
The Morrison's scheme will offer employees a choice of six funds; the default lifestyle profile fund, money market fund, fixed interest fund, household names fund, a FTSE All Share Tracker and a European index tracking fund.
Partner Insight: Members' evolving needs and expectations are driving changes in scheme administration. As the pensions landscape inevitably continues to change, how will your scheme's approach need to develop to keep pace?
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