Saga plans pension cuts to keep retirement scheme open

Oliver Gill
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Saga gives the over-50's the chance to sail on the high seas (Source: Getty)

Holiday and insurance firm Saga, which provides a range of services to the over-50s, is mulling plans to water down staff pension benefits in an attempt to keep its retirement scheme open.

By reducing payouts, the FTSE 250 firm hopes to plug a £19m shortfall in its final salary scheme.

Saga is one of only a handful of employers left keeping its defined benefit, or gold-plated, scheme open. Members receive retirement payouts based on their average earnings while working for the firm.

A consultation on planned changes, which could see staff forced to increase contributions and a cap on payouts, started in August and is due to close in December.

Read more: Saga cruises ahead with scheme targeting big spenders

In aggregate, UK pension deficits have grown in recent years. With regulators increasingly keen to clamp down on spiralling shortfalls, many employers have decided the best course of action is to shut schemes.

The cost of funding Royal Mail's pension scheme is at the centre of the current dispute that could lead to industrial action over Christmas. The postal giant says keeping the scheme open will see annual contributions rocket to more than £1bn.

Saga declined to comment on the ongoing consultation process.

Read more: Saga plots high-end holiday push

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