Milk producer Dairy Crest has become the latest major employer to close its final pension salary scheme for existing staff in an ever-increasing private sector trend.
The scheme has been closed to new employees but will now shut for the already signed up from April next year. Around 3,500 of Dairy Crest’s 8,000 staff will be affected. They will now be encouraged to join a defined contribution scheme which sees the company match whatever the employee decides to put in from his own wages. This ultimately pays significantly less than what the employee would receive through a final salary scheme upon retirement.
The company’s pension fund was £63m in deficit at last valuation in March this year and is expected to be £100m down by the time it finishes. Dairy Crest will have to pay £20m per year into the fund to balance the books.
However, “the reason we are closing the scheme is not to do with saving money or saving cash,” insisted Alastair Murray, Diary Crest’s finance director. It is to eliminate the risks associated with such programmes, the company said.
Dairy Crest’s main production and distribution sites are at Chadwell Heath in London and Stonehouse in Gloucestershire though it does have production sites around the country. It supplies own label milk to major supermarkets as well as operating the biggest door-to-door service in the UK. It also produces many recognizable dairy brands including butters and spreads like Utterly Butterly, Vitalite, Clover and St Ivel; Frijj milkshakes and Cathedra City cheese.