Construction and engineering group Costain has proposed to close its final salary pension scheme to current members amid fears that it has become too risky and costly run.
The firm, which was involved in the redevelopment of St Pancras station in London, is coming to the end of a consultation with employees regarding its plans to close the scheme to future accrual.
The deficit in the Group’s legacy defined benefit pension scheme as at 30 June 2009 was £75.7 million net of deferred tax, an increase of £39.6 million from the position as at 31 December 2008.
The firm’s first-half financial results statement, read: “The proposal to close the scheme follows the increasingly disproportionate risks and costs arising from a combination of factors including rising life expectancy, interest rate volatility and lower investment returns.
“It has been agreed with the scheme’s trustees to increase, with effect from April 2009, the monthly company contribution towards funding the scheme’s deficit by £0.4 million to £0.9 million until the next formal actuarial valuation of the scheme, as at 31 March 2010, is finalised. This is in addition to our ongoing commitment to match dividend payments with an equivalent contribution to the pension fund.”