Dozens of Midland firms could follow Rentokil Initial's lead and close final salary schemes to existing members, pension experts have predicted.

The forecast came after the support services company became the first FTSE 100 Index business to propose shutting its scheme to current members, freezing their guaranteed pension benefits at the level they have already built up.

Many companies in this region had already taken this decision, said John Scott, office head at the Birmingham branch of pensions firm Aon Consulting.

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Mr Scott said the idea would gather momentum, with serious consequences for pension provision.

He said: "Rentokil are the first big, FTSE company to do this, but some small companies in Birmingham have already done it.

"In the next 18 months I expect to see many more.

"The increasing cost of regulation and longer life expectancies is leading to greater uncertainty over the costs of pensions.

"The danger is that people who are in these schemes could leave them and pocket the money they were contributing and not save it for their pensions.

"I don't think we are going to see a meltdown, but it is going to be much tougher to attract people into company pension schemes and getting them to stay in them."

Rentokil's proposal for tackling its £349 million deficit is still subject to "comprehensive consultation" but could affect 3,000 current employees.

It does not impact on 15,000 deferred pensioners who have left Rentokil or the 8,000 pensioners already being paid.

An estimated 89 per cent of all final salary schemes are in deficit, faced with collective shortfalls of £130 billion - of which £40 billion are spread among FTSE 100 Index companies.

Experts said they expected other firms to follow Rentokil's lead, although firms concerned over the impact on staff morale may be tempted to wait until the number of members affected has been reduced to a more manageable level.

Charles Young, chairman of the pension schemes committee at the Association of Consulting Actuaries, said: "It has a slight smell of desperation about it but there are some companies where the pension scheme is just so large in the context of the company that they will consider doing it." ..SUPL: