WH Smith today put forward plans to close its final salary pension scheme to existing employees, fuelling fears that other major employers will embark on the wholesale closure of their generous retirement plans.
The high street retailer said the steep costs of running the scheme had forced the company to close the retirement fund.
Newspaper distribution firm Smiths News, formerly a subsidiary of WH Smith, said it also planned to close its final salary pension scheme to existing members.
The move by the firms will affect 2,500 workers who will be switched into cheaper retirement plans.
Almost two thirds of employers with final salary pension plans have closed their schemes to new members, but only a handful have cut the benefits to existing employees, most prominently pest control firm Rentokil.
A spokeswoman for WH Smith said that as part of a detailed review of its pension arrangements the company had written to 11% of its employees putting forward the changes.
She said the company wanted to bring all employees into the same scheme and cut costs.
The company said in a statement: "The long term costs of running a final salary pension scheme continue to be high and difficult to predict, mainly due to low investment returns and members living much longer.
"These factors have prompted many companies to review their pension arrangements and WH Smith is no different in this respect.
The spokeswoman said the company had contributed £282m over the last four years into the fund and was committed to pay an extra £10m each year to cut the ongoing deficit on its of £41m.
"But despite that there is still a sizeable deficit and with the prospect of increasing life expectancy increasing costs further, we sought to secure the scheme's long term future.
Smiths News said its net pension deficit as of September 1 2006 would have been £17m after taking into account a £25m one-off payment and considering deferred tax.