UK - The trustees of the Marks & Spencer Final Salary Pension Scheme are "very supportive" of the decision announced today to curb benefits for the fund's 21,000 members, company management says.
The retailer said that in a bid to trim costs it would cut more than 1,200 jobs and make changes to its pension scheme, effective from October 1.
It plans to cap employees' annual increases in pensionable pay to 1% and change the early retirement benefits for members who joined before 1996. The company cited investment returns and increasing longevity as being partly behind the decision. Unions expressed "serious reservations" about the proposal.
"This is done and dusted," said chief financial officer Ian Dyson on a conference call for investors. "The trustees have clearly been fully informed and are very supportive of the decision that we've taken."
He added: "The trustees have a responsibility to protect accrued benefits in the pension fund. This, to a degree, is about future liabilities that will arise.
"So they would be supportive on the basis that this helps protect the overall pension fund and the ability of the company to pay out the accrued benefits as of today."
Trustee chairman Tony Watson, the former chief executive of Hermes Pensions Management, was travelling and not available for comment. M&S corporate pensions head Lynn Collins was not available and her deputy John Westgate declined to comment. The National Association of Pension Funds also declined to comment.
An M&S corporate spokesperson said: "The trustee's primary role is to protect the benefits which members have already earned. The trustee is satisfied that it has acted in accordance with its powers and responsibilities."
The Union of Shop, Distributive and Allied Workers said M&S was severing the link between pensions and final salary.
It said: "For many of the scheme's members, by the time they retire the notional salary used to calculate their pension will bear little relation to their actual earnings. The scheme, in effect, will be final salary in name only.
"There are other, less drastic cost-saving initiatives that Marks & Spencer might have proposed instead - such as a move to a career average salary basis - and we would be very interested to hear whether they have fully explored the alternatives."
And the proposed changes to early retirement terms would "greatly concern loyal, longer serving staff at a time when they can least afford more financial uncertainty".
M&S chairman Sir Stuart Rose called the £5.2bn (€5.9bn) defined benefit fund, closed four years ago, a "very large cost to the business".
Rose added: "We've put something like £1.5bn into it in the last four or five years and with the returns we're getting on investments plus the fact that people are living longer we've had a long hard look at the costs to the business of running that scheme."
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