Marks & Spencer, the High Street retailer that runs what is widely regarded as the industry’s best final salary pension, is to restructure its scheme to plug a £704m funding ‘black hole’.

Recognised as a ‘gold standard’ UK investment retirement scheme for its members, under the new proposals the M&S pension will remain open to existing members but they will have to make contributions from their salaries or opt to receive lower benefits on retirement.

Until now, M&S staff earned the right to one-45th of their final salary in the form of a pension income for each year of service they had performed. Employees did not have to make any contributions from their salaries.

However, this is all set to change, with workers having to make a new kind of UK investment into their pensions by either making contributions from their salaries, which will rise 7% over the next three years; opt to not make contributions but see their pension pot grow at a much slower rate; or do not make contributions but agree to a limit on the rate at which their pensionable salaries rise.

“There is no do nothing option here, we have a £704m deficit and it has to be funded from our members’ UK investment,” said an M&S spokesperson. “We have to strike a balance between a healthy company and a healthy pension fund.”