GALLIFORD Try is set to close its final salary pension scheme at the end of the year because it is costing the company too much money.
The firm's pension deficit for 2005 was £46 million and senior Galliford Try executives are expecting this to shoot up this year, prompting the decision to shut it down.
Galliford Try employs 3,600 people and in a letter sent to the firm's 500 pension members last month, seen by Construction News, chief executive Greg Fitzgerald wrote: 'It has become apparent that the cost of maintaining the scheme will soon increase significantly.
'The company does not feel that it can afford to keep adding to the uncertainty and volatility of the cost of pension provision by allowing members to accumulate further pension benefits on a final salary basis.'
Pension members have until October 4 to comment on the plans, which would see the scheme closed on December 31 and future pension provisions calculated on pensionable salary and service from that date.
Mr Fitzgerald said that closing the scheme was the only way members would get paid their pensions in the future.
He added: 'We envisage that the scheme would continue to operate as a closed scheme in order to pay benefits as they fall due, rather than the scheme being wound up.
'This would mean that any money paid by the company into the scheme from January 1, 2007, onwards would go towards paying off deficit as opposed to funding future accrual.
'We believe that this will better equip the company to pay benefits due to members under the scheme than if we were to allow benef its to accrue.'
One employee told Construction News: 'I will be registering my objections to these changes. I think they will adversely affect my pension right. I'm not happy about it.'
Earlier this year Galliford Try bought Morrison Construction from AWG, with the water firm having to wear a £33 million hit due to provisions for the cost of eliminating the deficit from Morrison's pension scheme.