Barclays and BP call time on pensions

The death of the final-salary pension scheme has been all but confirmed after Barclays and BP, two of the country’s largest employers, called time on their long-standing arrangements.

CALLING TIME Barclays will no longer offer a final salary pension scheme CALLING TIME: Barclays will no longer offer a final-salary pension scheme

Barclays has closed its scheme to all of its 18,000 members to slash costs. From December, existing members of the scheme will have their rights frozen and moved to the cheaper pension plan that is offered to new staff.

A Barclays spokesman said: “Given the current economic situation, managing costs, including pension costs, is one of our top priorities. It is in the best interests of all Barclays employees and shareholders for us to do so.”

The move follows BP’s decision to close its pension scheme to new employees – a move that Barclays made more than a decade ago. The oil giant said that it could be in line to save as much as £120million a year as a result of the move.

Other large companies to close final- salary pension schemes include Rentokil and WH Smith.

Charles Cowling, managing director of Pension Capital Strategies, said that the current economic climate represents the “death knell” for final-salary pension schemes and expects a huge acceleration in the number of companies closing such arrangements over the coming years with around half already having made such a move.

“Although it is a good scheme for employees, it is horrendously expensive for companies. Given the current climate of job cuts and pay freezes, employees are being asked if they would like to keep their job or their pension – and most will choose their job,” he said.

However unions reacted with fury at the closures. Rob MacGregor, Unite National Officer, said: “Unite views this proposal as a break in the promise by Barclays to their workforce that they will not put profits before people. This attack on the pensions of the loyal and hard-working staff at the bank is utterly alarming.”

Cowling said that the writing has been on the wall for final-salary pension schemes for many years but as companies grapple with costs and massive pension deficits, such arrangements are likely to have no part to play in future plans as they are no longer “fit for purpose”.

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