Whitbread retains final-salary scheme

Whitbread, the Beefeater restaurant chain to Marriott Hotels owner, yesterday pledged to carry on funding its final-salary pension scheme in the face of a £350m shortfall.

The company is paying an extra £15m gross a year into the scheme for three years, increasing its annual top-up payments to £27m. It made the first of the extra £15m payments in the year just ended.

Sir John Banham, Whitbread's chairman, said: "By taking these prudent steps now, we are protecting our shareholders' interests by avoiding the immediate need for a major capital payment into the fund."

Whitbread's latest estimates, calculated under the FRS 17 accounting standard, show the company's pension scheme had a deficit of £350m gross, or £245m net, on 8 April. But the deficit has narrowed from 1 March – thanks to the near 20 per cent rise in the FTSE 100 over the past month – from an estimated shortfall of £420m gross, or £294m net.

Whitbread promised to continue funding its scheme, which was closed to new members from 1 January last year, for up to 15 years. It gave reassurances it would continue to act "positively" to fulfil its obligations. It also stressed that the extra payments it was making would have no impact on its profit and loss account.

Whitbread joins a long list of businesses that have had to take similar steps. The motoring group RAC said its staff would have to contribute an extra 4 per cent of their pay or face a reduced level of benefits. The company, which estimated a £129m deficit, said it would boost its own top-up payments by £5m a year.

Staff at Centrica, meanwhile, agreed to raise their contributions by 1 per cent while BAE announced increases of nearly 2 per cent and Tesco 0.75 per cent. BT admitted earlier this year that its pension fund deficit could have soared to about £2.6bn but said its actuary had advised it that there was no reason to significantly change its existing top-up payments.