Travis Perkins cuts back on final-salary scheme

The builders' merchant Travis Perkins revealed yesterday it had finally brought its directors' pensions into line with those of the rest of its staff, as it became the latest company to close its final-salary scheme to all new members.

The group came under fire from unions three years ago when it announced it would close the scheme to all employees apart from senior management. At the time, Travis Perkins said it needed to be able to offer attractive remuneration packages to continue to attract quality executives.

However, the company said yesterday all new employees would be offered money-purchase schemes, regardless of their position in the business.

After buying the DIY retailer Wickes last year, Travis Perkins has a total pension fund deficit of about £142m. It is talking to trustees over the level of annual contributions to be made to its schemes going forward.

Shares in the company rose more than 7 per cent yesterday as it reported marginally better-than-expected pre-tax profits for 2005, and told investors it expects profit growth to resume in the second half of 2006 after a difficult 2005.

A slowdown in consumer confidence hit demand at its builders' supplies and retail DIY outlets last year, with like-for-like sales at Wickes down almost 8 per cent over the year, and almost 11 per cent over the first two months of 2006.

However, the chief executive of Travis Perkins, Geoff Cooper, said signs of recovery were beginning to emerge, with sales at its builders' merchant outlets beating expectations over the past few weeks. "Although 2005 has been more challenging than recent years, our businesses have performed well against sector peers, and the group has made good progress, strategically and operationally," Mr Cooper said. "We now enjoy sector-leading operating margins in merchanting and DIY retailing.

"Lead indicators suggest our markets are set to recover gradually from the weak growth experienced in 2005. The work we have done to reduce costs, and capture synergy benefits and buying gains, leaves us well positioned to benefit from any improvement in volumes."

Analysts at Citigroup said the group looked as though it was "past its worst". Shares in Travis Perkins closed up 7.2 per cent at 1,606p, giving it a market value of almost £2bn.