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Vodafone joins list of companies closing final-salary pension schemes


Vodafone is to close its final-salary scheme to 4,000 employees.

The firm, whose pension is worth £755 million, has become one of the largest companies to take such action as a means of cutting costs and reducing the risks involved in providing retirement benefits.

A spokesman from Vodafone confirmed the company had sent a letter to staff to begin a consultation on the closure of the pension. He added the company would be making improvements to its defined-contribution benefit pension scheme to make Vodafone's pension provision more sustainable and affordable going forward.

Mark Duke, head of pensions at Towers Perrin, told HR magazine: "The action by Vodafone confirms the results of a very recent poll undertaken by Towers Perrin across more than 100 major UK employers. Of this group, 85% were expecting to announce significant pension changes in the next 18 months.

"We anticipate that many will take action similar to Vodafone while others will find different ways to mitigate the rising cost of promising a pension to employees. Whatever decisions are taken by employers, the result is invariably that employees need to take more responsibility for their retirement savings.

"Successful change means providing employees with the tools they need to help them choose the right level of saving, the right place to save and the right investment options. Employers therefore face new communication challenges but are also left with legacy defined-benefit pension plans that need proactive risk management."