Money purchase plan to replace it
Stationer and bookseller WHSmith has written to 11 per cent of its workforce outlining plans to shut its final-salary pension scheme as part of an ongoing programme to protect the health of the WHSmith Pension Trust.

The retailer said that the costs of continuing to run a final-salary scheme, which has been closed to new members since 1995, would be 'high and difficult to predict', because of low investment returns and members living longer. The planned changes would bring pension arrangements for all employees into line.

The company estimates that it has a£41 million pension deficit at present and will need to pay in a further£50 million over the next five years to fund it.

However, it has made good progress in recent years to reduce this, contributing£282 million over the past four years.

The proposed changes - for 11 per cent of the employees - are based on a money purchase arrangement, rather than the existing final salary agreement.

WHSmith said that, following the changes, staff pensions would be based on 'the level of contributions made, investment returns and the cost of buying a pension on retirement'.

Topics