GKN slams door on gold-plated pensions

Manufacturer GKN on Wednesday confirmed plans to shut its gold-plated pension scheme to head off rising costs.

The 260-year-old group will shift current final-salary members into a new defined-contribution scheme, which diverts workers’ future pension payments into a pot linked to the performance of the stock market.

The firm has also put a new pension funding plan in place and will pay £250 million of proceeds from a bond issue to fill a hole in the scheme.

The company has a £1.85 billion deficit across all its pension schemes, down from £2 billion in December.

“We continue to invest for growth and have made significant progress to address our UK pension deficit,” said chief executive Nigel Stein.

It operates two primary defined-benefit schemes, GKN2, which includes workers employed by the group, and GKN3 which involves mainly retired staff.

The company benefited from weak sterling in half-year results, with sales up 15% to £5.2 billion and underlying profits before tax rising 14% to £393 million.