Jardine forced to close pension plan to new members

Jardine Lloyd Thompson, the insurance broker, yesterday said it would close its final salary pension scheme to new entrants, as it injected £50m to help plug the scheme's funding shortfall and warned that the falling dollar would hurt its profits for the next two years.

The broker enjoyed record results in 2003, with profits up 10 per cent to £111m and turnover up 10 per cent to £429m, after insurance premiums rose to record levels.

But the success of the business has not been enough to save its pension scheme, which has been hit by increased life expectancy and the prospect of lower long-term returns.

The injection of £50m will go some way to alleviate the pressure of its £157m pension deficit. The company says this is the largest injection of any FTSE company relative to the size of its pension fund.

But the 1,400 employees in its final salary scheme are facing further changes to the way their pension benefits roll up. A number of companies have lowered the rate at which benefits accumulate over the course of an employee's career.

"We will be talking to employees about further changes. Not unlike most companies that have final salary schemes, we have a deficit, but we are making a major statement with the £50m injection. The changes we make will be very fair and balanced," Steve McGill, the chief executive, said yesterday.

The weak dollar is also causing problems. About 48 per cent of its turnover is generated in the US, but its costs are in the UK. "We so far have managed to mitigate the effects of the weak US dollar to a certain extent through hedging our exposure. But if the US dollar remains at its present levels, this will inevitably have an impact on our reported results over the next two years," Mr McGill said. The shares closed down nearly 4 per cent at 540p.

The company says, however, that it will start to feel the benefits of the weak dollar as it expands on the ground in the US. Rival companies are going cheap, and JLT is keen to make more bolt-on acquisitions.