Denton Wilde Sapte (DWS) has advised Rentokil on its landmark decision to freeze its final salary scheme.
The move stops future accrual for the benefit of existing members of the scheme. It is the first time a FTSE100 company has taken this step. Previous examples of companies closing final salary schemes have only related to new entrants.
Under the new Rentokil arrangement members will have their guaranteed benefits frozen at the current level no matter how long they remain with the company.
Rentokil’s decision will help its control the cost of its pension obligations with the aim of plugging the deficit in its pension pot.
Alan Jarvis, head of the employment and pensions department at DWS said in a statement: “Rentokil’s current deficit stands at £325 million. The company will be making payments until 2012 to cover this, but want to ensure that this situation will never arise again. I am glad that we were able to assist in providing an effective and manageable solution to this threatening situation.”
Rentokil is a longstanding client of DWS. Earlier this year the firm was instructed by Rentokil to advise on its corporate restructuring along with Freshfields Bruckhaus Deringer.