UK utility ScottishPower has become the latest in a string of major firms to close its final salary pension scheme to new starters. The Glasgow-based firm had been one of the last FTSE 100 companies to offer such a program.
The utility has also announced plans to increase retirement age for staff from 63 years to 65 as part of a raft of cost-cutting measures being undertaken by outgoing CEO Ian Russell.
According to a report in the Scotsman newspaper, the ScottishPower pension fund has a deficit of some GBP150 million, and existing members are to see their contributions rise as a result of the changes. The company did however say that employees who joined the firm prior to its 1990 privatization will be exempt from the changes to benefits.
A money purchase scheme is likely to be introduced to replace the final salary scheme, and trade unions have expressed their concerns that the changes will mean a far less generous retirement for ScottishPower staff in future. In a money purchase scheme, the employer is not required to quantify the precise level of payout.