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Shell axes final salary pension schemes

By STEVE HAWKES, Business Editor: 6 January 2012

SHELL is to scrap final salary pensions from 2013 — despite making billions in profits.

The oil giant will close its scheme to new recruits in two years.

All existing staff will be kept on final salary benefits — for now.

The move means that every UK company in the FTSE 100 has now scrapped the generous retirement packages.

It came as the UNITE union revealed thousands of health workers had “unanimously rejected” government calls to cough up more money for their own saving pots.

Matthew Sinclair at the TAXPAYERS ALLIANCE said Shell’s action showed a huge divide between the public and private sector. While the Government is £990 billion in debt, Shell is expected to post annual profits of almost £17billion for 2011.

Mr Sinclair told Sun City: “As the population ages, everyone is having to be realistic about the costs of providing for so many pensioners.

“Taxpayers shouldn’t be asked to pick up the bill for pensions far more generous than they enjoy themselves.

“And unions need to give up on futile strikes against modest steps to improve the situation.”

Shell — famed for its slogan “You Can Be Sure of Shell” — told staff the pension change reflected UK “market trends”, such as rising life expectancy and poor stock market returns.

It said in a statement: “The plan will be designed to ensure that the reward package in the UK for new hires remains strongly competitive.”

Other major British companies such as TESCO, DIAGEO and BP have all recently closed their final salary pension schemes — which base retirement pay on a worker’s last wage — to new recruits. They now offer schemes based on average pay throughout a career.

The NATIONAL ASSOCIATION OF PENSION FUNDS estimates that just 19 per cent of private sector final salary pension schemes are open to new joiners, compared to 88 per cent a decade ago.

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