Parent group Montpellier confirmed the decision on Tuesday at a preliminary results meeting. It revealed that it had a deficit of £7.8m on its final salary scheme, a rise of 65% on last year.
Montpellier group managing director Paul Sellars said the group’s scheme had been hit by new accounting requirements, low interest rates and inflation, and falling stock markets.
Sellars defended the decision to close the pension scheme to all staff except those retiring within the next five years, saying it was in the interests of the shareholders.
Sellars said: “It was the right thing to do – we would have regretted it if we hadn’t done this as conditions for pensions have worsened since we made the decision.
”We thought long and hard about this – we didn’t do it lightly. The employees were naturally very disappointed, some of them angry. I don’t blame them - in their situation the pension scheme was one the advantages of working for us.”
Sellars added that the pension industry was in trouble. He said: “It’s a very unsatisfactory state of affairs that we have got into.”
Montpellier’s decision coincided with the government’s new pension proposals, announced on Tuesday, aimed at encouraging longer working lives. Under the policy, early retirement will be discouraged, and compulsory retirement at 65 scrapped.
The YJL decision follows the closure of final salary schemes by contractors such as Galliford Try and Taylor Woodrow.
Analysts claim that pensions will be a major concern for the sector next year. Leslie Kent, analyst at stockbroker JM Finn, said it could well hit profit forecasts. Kent said: “I expect pensions to be a very, very serious part of profit and loss accounts in 2003.”