Marks dumps final salary scheme
HIGH Street retailer Mark & Spencer is to scrap its generous final salary pension scheme, joining the growing ranks of companies that are forcing staff to gamble their retirement income on the stock market.
The company, struggling to cut costs and revive its High Street performance, blamed the falling stock market for the pensions rethink. Its final salary scheme is £29m in the red and will need to be topped up. 'We have decided to embark on a review of benefits to redress the fund liability and to provide more protection,' a spokeswoman told Sunday Business.
The firm is to introduce a money-purchase pension scheme for new employees, although its plans will not be finalised until January.
Staff in company pension schemes have traditionally been guaranteed a retirement income of two-thirds of their final salary. But many firms are abandoning these schemes, which have become too expensive as staff live longer and retire earlier. Money-purchase schemes are cheaper to run because the pay-out depends on investment performance. But they also pay out less in retirement.
A string of other blue-chips have also cut their final salary schemes, including Sainsbury, Tesco, Barclays Bank, Lloyds TSB, Lattice and ICI.
The Association of Consulting Actuaries warned last week that such moves could leave a generation not saving enough for their old age.
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