Banks to axe final salary scheme

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The Independent Online

National Australia Group, which owns the Clydesdale and Yorkshire banks, became the latest corporate giant to announce plans to axe its final-salary pension scheme yesterday, exposing itself to a backlash from its 8,000 UK workers.

The proposals, to be voted on by employees next month, would see staff pensions calculated as a percentage of career average earnings rather than as a proportion of their final salary. This would result in a significant drop in retirement income for most members of the scheme.

As part of the deal, NAG says it will make an immediate payment of £100m into the company's defined-benefit schemes, which have assets of more than £1.5bn, helping to close the combined deficit of £426m. The proposals come after more than a year's discussion between NAG, unions and the pension fund trustees. Amicus, the union, said yesterday the plan was the best it could have achieved "through negotiation", adding it was pleased NAG staff were being given the chance to vote on the changes.

Lynne Peacock, NAG UK's chief executive, said the pension proposals were part of a larger programme of restructuring. She added that the planned reforms, including the £100m contribution, were "fair and equitable".

The Co-operative Group is facing strike action after announcing similar plans to NAG's this month. Last month, Rentokil Initial became the first big company to announce it was shutting its defined-benefit scheme for existing members.