17 May 2006
Royal Bank of Scotland became the latest in a string of major UK
companies to shut its final salary pension scheme to new employees.
The change came just two months after Sir Fred Goodwin, the chief
executive, vowed to honour the "emotional contract" made with staff
over their pension benefits. However, from October the bank will
instead pay new employees an extra 15 per cent on their salaries to
spend as they choose.
Existing members of the final salary scheme, which is
non-contributory for employees, will also be given the choice to
opt out and take the extra pay. The bank has about 90,000 employees
and 225,000 current and retired staff in its final salary scheme.
It made pre-tax profits of almost £8bn last year, but
liabilities within the pension scheme were £1.9bn more than
Neil Roden, the bank's head of personnel, said the new plan
would offer staff greater choice and flexibilty.