20 December 2005
Clive Gawthorpe, tax partner at our Manchester office, said:
"This comes as little surprise to those who have followed the dwindling fortunes of UK company pension schemes. Many smaller businesses have already bitten the bullet and closed their final salary schemes and it was only a matter of time before a large national company dared to do the same.
"Big companies have been resistant to pull their schemes because of bad press and the effect on employee morale and motivation, but with one of the largest deficits among FTSE 100 companies, Rentokil had little choice but to follow suit."
"Final salary schemes are a legacy of a 1950s boom, at a time when a job was for life. In an increasingly insecure and mobile jobs market, younger employees are now choosing to make their own personal pension arrangements."
"Rentokil has made a pre-emptive strike before its pensions crisis becomes the company's downfall. Supporting senior personnel through retirement is a big worry for companies, many of which no longer have guaranteed investment in pension plans by younger workers, or the benefit of Pensions Tax Credits, to rely on."
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