Barclays injects 500 million into pension following announcement of final salary scheme closure

Last month HR magazine reported Barclays staff were considering strike action over the closure of the scheme to 18,000 existing members. In response the bank's chief executive John Varley announced a £500 million injection into the schemes £2.2 billion deficit.

The size of the deficit means the scheme is still set to close, but Varley announced the closure would now take place in April 2010 rather than December this year. Staff will be given 5% of base salary as a cash payment in December, which they can use to contribute into the pension scheme.

Barclays will also introduce phased approach to contributions, in order to give staff more time to adapt to contributing to the new defined benefit scheme. Staff will be required to pay 1% by 2011 rising to a minimum of 3% by 2013.

The firm will communicate the changes using a booklet to be distributed over the next month.

Varley said: "We now move forward to implementation, with the strong conviction that in doing so we will better safeguard the retirement benefits of all existing and former employees of Barclays.

"I have come to [this subject] reluctantly, but I felt I had an obligation to deal with the issue of uncapped pension liability now. It would have been easier to have left this to another generation of leaders. But it was clear to me that it would be wrong to do so."

He added: "Keeping Barclays safe is at the heart of what I've been doing these last two years. Securing a bright future for the long-term requires us to take some very difficult and painful decisions. That's what we've been doing, and this is another one of them. These changes are not triggered by the current economic climate; but the need for them is certainly demonstrated by what has happened over the last two years. I know that I have asked a lot, but I am certain that what we are doing here is right."