Court threat over pensions cut

BIG Food Group, the retailer formerly known as Iceland, may face legal action over its plans to shut down its final-salary scheme. The company has toned down widely criticised plans to ditch its secure final-salary scheme and shunt workers into a riskier stock market-linked alternative.

But shop workers union USDAW believes more than 4,000 workers in the final-salary scheme risk a poorer retirement. It is seeking counsel's opinion on contesting BFG's move through the courts. The move follows a climbdown by accountant Ernst & Young over the closure of its final-salary scheme after a legal challenge by a group of employees.

BFG and E&Y stunned the City when they announced plans to shut their final-salary schemes to both new and existing staff. Many big firms have closed their schemes to new workers, but most allow present members to carry on building up benefits. After consultation with staff, BFG, led by chief executive Bill Grimsey, is offering to pay higher contributions to the new fund, according to a formula based on an employee's age and length of service. It has also improved the benefits to be paid from the closed scheme.

Terry Savage of USDAW said: 'Their proposals are better, but still not as good as a final-salary scheme.' BFG said it could not comment on the possible legal action.