Whitbread in pensions shake-up

LEISURE group Whitbread is set to slash its pension bill by closing its £1.2bn final salary-linked scheme on New Year's Day. The 40,000 members will not be affected, but new recruits will be channelled into either a cheaper and riskier money purchase scheme or a stakeholder pension.

Whitbread may pay in as little as 3% of salary - down from 10.9%. The company says it has a large final salary liability which could lead to volatile pension costs.

The introduction of new tough FRS 17 accountancy rules are also to blame. The rules force firms to take the full cost of pensions into their accounts in one year - which would cause BT to show a £4bn pension deficit.

Whitbread has no major concerns about the health of the final salary scheme.