WH Smith pulls the plug on pension plan
Retailer WH Smith yesterday announced plans to shut its final salary pension scheme for nearly 2,000 workers.
In a move to plug a £41 million deficit, WH Smith employees due to receive final salary pensions will be moved on to money purchase schemes, where the final pension pot is determined by fund performance and contributions, rather than years of service.
Around 11 per cent of the group's workforce will be affected by the move, which is currently subject to consultation. A further 700 staff in Smiths News, which was demerged from the group last August, will be hit by similar proposals.
Final salary benefits already accrued are not set to be affected.
Pensions expert Dr Ros Altmann, spokesman for the Pension Action Group, said WH Smith's move was disappointing. "It will be difficult for people who will have to get used to the idea that there is not going to be the pension they thought there would be."
WH Smith has paid £282 million over the past four years to reduce its pension deficit and has earmarked another £10 million a year for the next five years.
"The long-term costs of running a final salary pension scheme continue to be high and difficult to predict, mainly due to low investment returns and members living much longer," the company said.
The 10,900 deferred pensioners who have already left WH Smith or the 5,100 existing pensioners and spouses who currently draw pensions from the Trust will not be affected.
Amicus, which represents half of WH Smith's workers, said the proposal would give the company "backstreet" pensions and pay.
Spokesman Anne Field said: "We are appalled, not least because its provisions were bad enough, but a money purchase scheme will give members an even poorer return."
"These workers are already on dreadful rates of pay. We are disgusted that the company is the architect of this situation."
