Marks and Spencer to change final salary pension scheme to cut costs

Marks and Spencer has announced changes to its final salary pension scheme and early retirement arrangements in a bid to cut costs.
The retailer says it will cap employees’ annual increases in pensionable pay to 1%. This will affect 21,000 employees who are active members of the final salary pension scheme, from October this year.
Members who joined the pension scheme before 1996 also face changes to their early retirement benefits from April 2010.
The changes to the pension scheme, which closed to new members in 2002, were announced together with 27 store closures and 1,230 redundancies, in an interim management statement released this morning.
Chairman Stuart Rose said the changes were necessary to help the retailer reduce operating costs by between £175m and £200m.
Marks and Spencer informed employees of the changes today and has set up a pension hotline to help staff understand them.
The retailer says it will not consult employees about the changes, as it needs to act quickly to secure the savings but a spokesman said the pension is an important benefit.
However, Naomi Cooke, GMB national pensions officer, said: “Marks and Spencer is obliged to consult employees properly regarding these arrangements. GMB will be looking to see how Marks and Spencer intends to go about doing this.”
However Ian Bell, head of the pensions group at Baker Tilly, said this type of change would become increasingly common.
“Marks and Spencer should be commended for finding a way of introducing risk sharing into their DB scheme to control cost as opposed to taking more drastic action of closing to future accrual.”