Barratt closes DB as deficit exceeds €100m
UK - Barratt Developments, the UK housebuilder, has joined the ranks of companies ending their final salary pension schemes by announcing the closure of its defined benefit (DB) pension scheme to existing members from 1 July.
The scheme was closed to new members in 2001, and its existing 350 members - mainly employees in upper salary brackets -- will be moved on to the defined contribution (DC) scheme which replaced it, and which covers the rest of Barratt's 5,000-strong workforce.
Last week, Barratt issued a trading update for the year to 30 June 2009 which highlighted continued stability in the new housing market. But the group said the pension fund deficit was now £87m (€101m), and longer life expectancy meant the fund was becoming too expensive to run.
Meanwhile, UK regional publisher Archant is planning to cap pensionable salary for the 270 members of its DB scheme, with benefits for future salary above this level to be provided through the company's DC scheme.
This scheme replaced the DB scheme when it was closed to new members in 1998, and it now has over 900 active members.
Adrian Jeakings, chief executive, Archant, says: "Archant has recently undertaken a review of its final salary pension provision. The review concentrated on reducing pension scheme liabilities and the rate of their growth and concluded that changes should be proposed to the active membership."
At 31 December, 2008, the DB scheme had liabilities of around £150m and it was 71% funded, giving a shortfall of about £43m.
For existing DB scheme members, pensionable salary will be capped from a specified future date, which is proposed to be no later than December 1, 2009. If they wish, members will also have the option of leaving the DB scheme altogether, accruing all future benefits in the DC scheme.
The company will start a consultation exercise with DB scheme members in late August.