Death Knell for WH Smith pension scheme
WH Smith is the latest in a long line of employers to close its final salary pension scheme. The retail giant revealed that 11% of its staff, around 2,000 workers, are currently members of the scheme.
WH Smith’s final salary pension scheme has been closed to new members since 1995 – staff joining since then have been offered access instead to the less generous money purchase pension scheme.
The retailer assured those already drawing their pension from the final salary scheme fund that they would not be affected. Neither will former workers who have already left the company.
WH Smiths said that the final salary scheme running costs were “high and difficult to predict”. It already estimates there is a hole of £41 million in the pension fund, and it would have to pay in £50 million over the next five years in order to fund it.
The closure of the pension scheme has already been sanctioned by the trustees, but the company is also obliged under recent legislation to consult with those members affected before proceeding.
WH Smith said that in future staff pensions will be based on “the level of contributions made, investment returns and the cost of buying a pension on retirement.” That contrasts with the final salary scheme, under which an employee receives a guaranteed percentage of their salary for every year they work for the company.