Asda closes final-salary scheme

SUPERMARKET group Asda has become the latest in a growing list of big firms to close its final salary pension scheme to existing members.

The move will affect about 3,800 managerial staff across the UK, and follows a near-doubling of the scheme's deficit during the past nine months. The funding shortfall has jumped to 400 million, up from 210m at the beginning of this year.

An Asda spokesman said: "We're no different to other major companies who are looking for ways to address the uncertainty that legacy final salary schemes create for business. We're by no means the first; we certainly won't be the last."

Members will be transferred to Asda's defined contribution scheme, which was set up in 2005 after the final salary plan was closed to new entrants. Those affected will be given a one-off payment equal to 25 per cent of their salary to cushion the transfer.

Britain's second-largest grocer said it would also make unspecified improvements to its defined contribution scheme, which is open to all of its roughly 175,000 staff.

The move by Leeds-based Asda follows rival Morrisons' decision to close its final salary scheme last year. Others such as Taylor Wimpey, Vodafone, Barlcays, Aviva, BMI and Dairy Crest have been forced in recent years to axe their final salary plans in the face of increasing longevity and difficult investment markets.

The news came a day after the government confirmed it was looking at alternatives to final salary schemes for public sector workers. Thursday's report from former Labour Cabinet minister Lord Hutton also suggested that employees might have to put more into their pensions and retire at a later age.