More firms close final-salary pension schemes

| November 9, 2009 | 0 Comments
More firms close final-salary pension schemes

It has been revealed that sugar firm Tate & Lyle and newspaper publisher Trinity Mirror are the latest firms to close their final-salary pension schemes.

Tate & Lyle blamed the decision on a hike in the scheme’s deficit to £110 million which will see the scheme close to half of its UK workforce next April.

Commenting on the decision, the firm said: “With a view to containing our pension costs and reducing balance sheet volatility, we have commenced consultation with employees who are active members of the UK Group Pension Scheme on the closure of that scheme to future accrual from April 2011.”

The scheme was closed to new members in April 2002.

Trinity Mirror, meanwhile, which closed its final salary scheme to new joiners in 2003, said its pension deficit increased by £68.6 million in the first half of the year to £275 million as at the end of June.

In a statement, the firm said: “Closing these schemes to future accrual would help limit the increase in liabilities in the defined benefit pension schemes and help the group to fulfil its commitment to eliminate the current deficit.”

The recession has resulted in a number of companies closing their final-salary schemes to existing members, as well as new members.

In September, Dairy Crest, which is one of the UK’s largest milk firms and makes brands such as Country Life and Clover butter, said it would close its final salary pension scheme to existing members, having closed the scheme to new employees in 2006.

This followed announcements from other blue-chip companies including banking giant Barclays, oil firm BP and supermarket Morrisons, who have all announced plans to close their final salary schemes.

In April, the British subsidiary of the US insurance broker Aon said it planned to reduce its pension contributions to cut its costs - saying it needed to be “protected in challenging conditions”.

In related news, a recent report from the Office for National Statistics revealed that 100,000 private sector final salary schemes closed in 2008, taking the number of schemes to a record low of 2.6 million.

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