The Royal Bank of Scotland, Britain's second-largest bank, announced Tuesday it will no longer admit new employees to its final salary pension plan, part of a broader overhaul of its retirement benefits.
In place of the traditional defined-benefit arrangement, new staff will receive a contribution equal to 15 percent of their annual salary to direct toward private pension investments. HR director Neil Roden said the change offers workers "increased choice and flexibility" in retirement planning.
The move reflects a wider trend in British business. The stock market slump of 2000 to 2003 drove up pension deficits across the country, pushing many companies to abandon defined-benefit schemes in favor of contribution-based alternatives.
RBS's existing final salary plan covers 225,000 members. The bank's pension deficit was recorded at 1.9 billion pounds at the close of 2004, though RBS has since made a one-time payment of 933 million pounds and contributes roughly 380 million pounds annually. The bank employs approximately 85,000 people worldwide.
Historical summary. TurkishPress restated this wire report, first published in May 2006, in its own words.