John Lewis adds time clause to final-salary scheme

The John Lewis Partnership is to reduce the benefits of its pension scheme in an attempt to cut escalating costs. The move by one of Britain's most paternal employers is a further blow to UK company pension provision, which has seen a long list of companies close their final-salary schemes.

John Lewis is retaining its final-salary scheme, but the retailer is proposing that new members will not be able to join until they have worked for the partnership for five years. The company says this will cut costs by £16m a year. The cuts are more draconian than previously thought, as the group had indicated a two-year waiting period.

But John Lewis is anxious to ease the burden of its pension contributions, which totalled £65m last year. This equates to 10 per cent of its total payroll, one of the highest levels of contributions in the retail sector. It compares with 0.1 per cent at Arcadia, 0.8 per cent at Boots and 0.5 per cent at Debenhams. The company said: "We thought this was the only practicable way to make reasonable savings in our pensions costs."

Sir Stuart Hampson, the chairman, said only weeks ago that its final-salary scheme was a "point of difference" for the company and that it was committed to it. However, the group's director of personnel said he did not think the changes "would materially affect our ability to recruit partners". John Lewis plans to bring the proposal before its Central Council in February for approval.