UK- The £3.4bn (€5.5bn) Marks & Spencer has become the latest UK company to close its final salary defined pension scheme plan to new entrants.
The clothing and food retailer has announced that after 1 April anyone joining the company will be encouraged to join a defined contribution retirement plan. Members of the new plan will be expected to contribute between 3% and 6% of salary to which the company will add between 6% and 12%. There is a qualifying period of one year.
Current employees will remain in the existing non-contributory final salary scheme.
John Peachey, head of group pensions, said: “The new flexible scheme is more appropriate for today’s business environment.”
However, M&S has acknowledged that the primary reason for the move is to reduce costs. Last year, the final salary scheme accounted for 22% of the company’s £545m salary bill.
John Monks, general secretary of the Trades Union Congress said: “Employees who argue they are making their pensions ‘more flexible’ are just cutting costs and slashing workers’ pay. M&S are cutting their contribution in half and shifting all the risk to their employees.”
Other large UK employers that have closed their final salary schemes to new entrants include ICI, Sainsbury’s, BT and Abbey National.