STAFF at a Hampshire based insurance giant are to be consulted on plans to close their final salary pension.

Zurich which has offices in Whiteley has said the move is being made to safeguard its long-term future as a successful business and major employer, as well as harmonising pension benefits for all staff.

Bosses said the decision was made amid a background of higher life expectancy and the continuing low Bank of England interest rates environment - all of which are leading to huge increases in the cost of the scheme.

Gary Shaughnessy, CEO of Zurich's UK Life business , said the company had not taken the decision to propose these changes lightly.

He said: “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.”

About half of the insurer's UK employees are currently in the defined contribution section of the pension scheme.

The majority of those would be better off under the proposed new arrangements, which are subject to consultation and would include employer contributions of 12 per cent for everyone regardless of age, seniority or length of service.

For those in the final salary section, benefits already accrued would maintain the link to final pensionable salary when members eventually leave or retire. Zurich is also considering changes to the death in service benefits and ill health cover it provides to employees.

The company has proposed a range of options for consultation.

Mr Shaughnessy said: “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.”

During the consultation period, which runs until mid-January next year, Zurich will be holding a series of pension seminars where employees can discuss the specific implications of the proposed changes.