Manchester, UK-based retail-to-banking group the Co-operative has become the latest company to join a growing group of UK employers that have closed their final salary pension programs to current workers.
Following in the footsteps of companies such as Rentokil Initial, Co-op has decided that offering its current staff pensions based on their final salary is too expensive, so from April 5, 2006, Co-op workers will be switched to an average salary scheme. Employees will contribute 6% of their pensionable earnings and the Co-op around 16% in the replacement scheme, the BBC has reported.
However, as the new deal will reduce the value of staff pensions, unions have predicably come out strongly against the plan. Ron Webb, national secretary for transport at the T&G union has warned the Co-op that its decision will not be the end of the matter adding that industrial action was a consideration.
Former employees and retirees would not be affected by the new pension plan.