Royal Bank of Scotland has become the latest major company to shut new employees out of its pension scheme.
No new members will be admitted from October, at which time existing staff will be given the option of investing 15 per cent of their salary elsewhere.
RBS, Britain's second biggest bank, said yesterday that new staff will be given a 15 per cent salary boost as compensation for not being able to join the group pension scheme.
Current employees can stay in the scheme or get 15 per cent of their salary to invest in other savings programmes. RBS said the move will give staff greater options for their pension and it will cost it roughly the same as the current scheme, under which pension payments are based on an employee's final salary. The Edinburgh-based bank had a pension deficit of £1.9 billion at the end of last year.
It has 90,000 employees in Britain and there are 225,000 members currently in its pension scheme. There will be no change to arrangements for RBS pensioners and deferred members.
Big deficits in UK company pension funds have created headaches for companies and many firms have shut their final-salary pensions or cut benefits for employees.
But since mid-January rising stock markets and bond yields have significantly reduced pension fund shortfalls, taking some pressure off companies to take drastic steps.