M&S jumps on pensions bandwagon

STORES GROUP Marks & Spencer confirmed it will this spring join the swelling ranks of companies axing valuable pension schemes. It acted as experts blamed Labour stealth taxes for the epidemic of firms scrapping final salary plans.

Frozen foods chain Iceland and accountancy firm Ernst & Young last week said they were forcing staff out of their final salary schemes into riskier stock market-linked arrangements.

M&S admitted that it is closing the doors of its non-contributory scheme to new employees from 1 April, but pledged to keep it going for its 60,000 present members. Details of its new scheme have not been revealed, but new staff are likely to have to contribute.

Pensions guru Stuart Ritchie of Scottish Equitable said that Chancellor Gordon Brown's removal in his 1997 Budget of tax credits on dividends, costing £5bn a year, is one of the biggest culprits for the exodus.

Ritchie said: 'Brown hoped people wouldn't notice this stealth tax because they wouldn't see any money coming out of their pocket immediately. But it is one of the biggest pressures facing final salary schemes, which are the best way of providing for retirement for the employee.'

Salary-linked schemes are also struggling to cope with longer life expectancy and new accounting rules, forcing firms to declare gains and losses all at once, rather than spread them over time.