UK- House of Fraser Group has announced it is closing its defined benefit pension scheme to new entrants while it carries out a review with the consultants Bacon & Woodrow.

The review is expected to be completed in a couple of months, until which there is no final decision on the fate of the scheme. But Finance director David Adams would not rule out the possibility of the scheme closing to its 3,000 existing members.

House of Fraser says that under FRS 17, the new accounting standard requiring companies to report their assets and liabilities at market value, the scheme has a net deficit for 2001 of £41.4m.

The closure comes after numerous companies including the supermarket group J Sainsbury and BT have announced the closure of final salary schemes and replaced them with money purchase, or defined contribution, pensions.

Most companies going down this path have in part blamed the new accounting standard as a reason behind the decision.

But the latest announcement coincides with research by the Trades Union Congress (TUC), the body representing over 7 million workers, that has criticised the closure of defined benefit schemes saying that cost cutting one of the main reasons behind many of the closures.

Says the report Pensions in Peril: “while standards like FRS17 and the MFR may put certain pressures on schemes they do not in themselves create deficits on pension funds. They are statistical measures that attempt to provide a picture of pension costs and funding.

“This is a simple but important point that has perhaps sometimes not been understood. In many cases employers are using the MFR and FRS17 as excuses to accelerate decisions that they were planning to take anyway.”