Rentokil unveils pension scheme closure plans
Pest control company is first FTSE 100 group to plan closure of final salary scheme
FTSE 100 company Rentokil Initial has announced controversial moves to close
its final salary pension scheme, which would freeze benefits for around 3,000
employees.
The pest control to security group is thought to be the first FTSE 100
company to announce such plans. Under the measures employees will have their
guaranteed benefits frozen at current levels, regardless of how long they have
worked for the business.
Rentokil’s chief financial officer, Andrew MacFarlane, told the
Financial Times that in relative terms, the company had one of the
‘largest deficits in the FTSE 100’.
‘Although we have the financial capacity to deal with the deficit now, we had
to make sure that another deficit does not arise in the future’, he said.
MacFarlane added that the company was concerned about the impact of rising
human life expectancy on its finances and that it wanted to control the present
pensions cost and safeguard against the risk that costs could soar in the
future.
It is thought that Rentokil will consult with its members before a firm
decision on its final salary scheme is made next year. The scheme’s UK deficit
under IAS19 at the end of November 2005 was estimated to be £325m.
The total deficit for companies in the FTSE 100 is estimated at about £40bn.