Morrisons has closed its final salary pension scheme to existing members in favour of a career average option.
The move means that pensions for the scheme's 10,000 members will now be based on their average earnings during their time with the group, rather than their pay immediately before they retire as had been the case previously.
The Bradford-based retailer will continue to bear the risks associated with providing the scheme, rather than transferring these on to members, but the size in pension that members will receive will be cut.
The supermarket is the latest company across all industries to close its increasingly expensive final salary scheme, which has been hit by rising life expectancy and falling investment returns, in favour of defined contribution schemes where the individual takes on the risk of volatile market shifts in the future.
Morrisons has already injected £200 million into the scheme and adopted more prudent assumptions about how long members will live for once they have retired in a bit to make its pension scheme more sustainable.
The scheme is already closed to new members and the changes will only apply to new benefits accrued by existing members.
Morrison’s new arrangements start on August 1 and it is expected the retailer will retain around £50m-£70m in credit as a result.