JLT closes final salary scheme to existing members

The insurance broker Jardine Lloyd Thompson became the second company in as many days to take the controversial step of closing its final-salary pension schemes to existing members yesterday, as it unveiled a fall in first-half profits and warned of tough conditions over the months ahead.

Although JLT closed its final salary schemes to new members several years ago, 1,000 of its 2,500 existing employees still participate in the old plans.

If it suceeds in closing the schemes completely, staff will be moved into a less-generous defined contribution scheme.

The news comes just a day after department store group Debenhams announced it was also closing its final salary scheme to existing members, in spite of having no deficit in the fund. JLT's fund has a deficit of £146m, which the group plans to pay down over the next few years.

JLT yesterday revealed a 2.5 per cent fall in first half profits, on the back of a 3.9 per cent rise in turnover. Dominic Burke, the chief executive, said the company's profit margins had been squeezed by increased competition in the sector, which he did not believe would abate before the end of the year.

Jim Rush, the finance director, said that the group's expense ratio had also risen over the first half from 83.2 to 85.3 per cent. He added that this was likely to continue to increase in the second half before coming back down.

Mr Burke said that the group was still on the hunt for acquisitions after walking away from talks with Heath Lambert last month.

He added that although Heath Lambert would have been a good strategic fit with the group, there were a number of conditions tied to the deal which made it unattractive.

Shares in the company fell as much as 4.7 per cent yesterday afternoon before recovering slightly to close down 12.5p at 357p, giving the group a market value of £754m.