Whitbread, the owner of the Costa Coffee and Premier Inn chains, became the latest British company to cut into workers’ retirement provision today as it unveiled plans to shut its generous final salary pension scheme to existing staff.
The leisure group, whose move follows a string of similar closure plans by other UK companies, said that 800 staff, or about 3 per cent of the workforce would be affected.
Staff currently contributing to the final salary scheme, which pays out a pension based on their earnings, will be transferred into a more risky defined contribution scheme, whose performance is based on rises and falls in investment markets.
The final salary scheme, which was shut to new joiners in 2002, was labouring under a deficit of £233 million as at the end of February, a huge increase on the £33 million shortfall that was recorded the previous year.
Whitbread joins a growing list of companies to embark on plans to shut their final salary schemes to current as well as new staff. Cash-strapped businesses are increasingly claiming that the cost of offering such generous retirement provision has become unsustainable.
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Wm Morrison, the supermarket group, IBM UK, the technology firm, and Costain, the builder, have all announced plans in recent months to wind-up their schemes.
Barclays, the banking group, and Fujitsu, the UK arm of the Japanese technology company, have both faced the wrath of their workforce — including strike threats — after embarking on similar plans.
Whitbread, which has just completed a four-month consultation over its pension provision, denied that it was shutting the scheme because of the deficit.
Lesley Williams, the pensions director at Whitbread, said: “The changes will bring the pension benefits across the business into line and ensure that we offer fair provision pension benefits to all.”
Whitbread also said that it was extending the eligibility of its defined contribution scheme to include a further 14,000 staff. It plans to increase company contributions to the scheme. The company said that 28,000 of its 33,000 staff are now eligible for a pension.