Nationwide shuts pension scheme

THE NATIONWIDE Building Society is axing its final-salary pension scheme for new staff. The mutual, which blames rising costs, is the latest in a long line of companies pulling the plug on generous pension benefits.

Last week Abbey National closed its doors on its final salary scheme, following deserters Ernst & Young, Iceland, ICI, Legal & General and CGNU.

Nationwide said existing members in the final-salary plan can continue contributing, but the door is closed to new staff. A new pension scheme, called the Career Average Revalued Earnings pension (CARE), is being introduced for them. This will calculate pension benefits by taking the average salary of an employee over their years of service, rather than using only their final salary.

'The final-salary pension fund was coming under increasing pressure so it has had to be closed to cut costs,' said Denise Walker, head of corporate personnel. 'The new CARE scheme, we believe, is more generous than a simple money purchase plan and not all the risk will be put on to employees,' she added.

Nationwide contributes 19% of employees‘ salaries into the final salary scheme. Under the CARE pension plan it will contribute 12.6% and employees contribute 5%.

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