Shell scraps its final salary pension scheme

The oil giant Shell came under attack yesterday after announcing it is closing its final salary pension scheme to new workers.

The Unite union condemned the move, saying Shell was "turning the screw" on workers.

Shell is one of the last companies in the FTSE 100 to offer new staff a final salary pension scheme, which provides staff with a guaranteed pensions based on their length of service and their pay when they retire.

But from 2013, the oil giant plans to offer new staff a so-called defined contribution plan, where the company only commits to contribute a set amount into a pension scheme, leaving the pension staff ultimately receive dependent on the markets.

Unite's general secretary Len McCluskey said: "This is disgraceful – nothing less than greed on the part of one of the world's richest and most powerful corporations.

"They have no need whatsoever to close this scheme and in the process deny their employees the safe retirement they were promised they could save for. Shame on Shell, for where they lead, other corporates will follow."

A Shell spokesman said: "The company is proposing to develop a UK defined contribution pension plan for new hires to Shell to reflect market trends in the UK.

"Timing is proposed to be quarter one, 2013. The plan will be designed to ensure that the rewards package in the UK for new hires remains strongly competitive.

"Current active members, deferred members and pensioners of the Shell Contributory Pension Fund (SCPF) and the Shell Overseas Contributory Pension Fund (SOCPF) are not impacted by this proposal.

"Active members of the SCPF and SOCPF will continue to accrue pension benefits within those plans on the same basis as now.

"The company has confirmed that its commitment to funding the SCPF and SOCPF remains unchanged. Further details of the proposed pension plan for new hires will be made available as the design is progressed."