Zurich plans to close its final salary pension scheme to new accruals as the insurer looks to remove risk from its balance sheet.
The firm is consulting its UK-based staff on proposals to move all staff into a defined contribution arrangement from July 2015. Zurich will pay a flat rate of 12 per cent into each member’s retirement account.
Employees currently in the final salary scheme would build up no further benefits after 30 June 2015 under the plans.
The insurer says around 7,200 people will be affected by the proposals, almost half of which are currently in the firm’s DB scheme.
Zurich UK Life chief executive Gary Shaughnessy says: “We are of course sensitive to the impact of these proposed changes on our people, but we have done our best to make our proposals as equitable as possible to all.
“If these changes go ahead, our pensions offering to employees will be in the top 25 per cent in the market.
“We simply cannot ignore the impact on the long-term sustainability of our UK business of the cost of funding an open defined benefit pension scheme.
“This is about looking ahead, recognising that the current arrangements are not sustainable, and acting now to ensure that our future arrangements for all our employees are.
“All our people will have a chance to challenge and comment on our proposals over the next two months, and to play a part in shaping the final outcome.”