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This scene took place at the height of Montpellier's pension trauma 18 months ago. The company was in the first wave of large British firms to close their final salary pension schemes to all staff. These schemes are lucrative to employees, but can be severely damaging to the companies 鈥� Montpellier was acting to plug a 拢7.8m pension fund deficit in 2002.

Since then, the crisis has deepened. Mercer Human Resource Consulting estimates that falls in the stock market mean the country's largest 350 companies' funds are about 拢90bn in the red. In March, Carillion, ROK Property Services, Travis Perkins and Mowlem announced a combined shortfall of 拢222m. These firms responded by making their final salary schemes unavailable to new members. New staff were offered a money purchase pension, which transfers much of the investment risk from employer to employee.

But last week, an even more worrying trend for construction employees emerged: following Montpellier's lead all those months ago, Rok and Alfred McAlpine decided to close their final salary schemes to existing members as well as new entrants. Bob Blackman, head of construction at the T&G union, says that if other building firms follow suit, it could destroy the retirement plans of a generation of construction workers: "People may have been investing in a pension scheme for 20 or 30 years, only to find, through no fault of their own, that it has been closed down. They are just victims of cost-cutting."

Blackman is preparing for a fight. He says that the T&G is pushing the Department for Work and Pensions to introduce legislation that will offer greater protection to workers, as there is little obligation for companies to consult them when they decide to close down the pension schemes.

With accounting rules changing in 2005, pension deficits will have to be taken off shareholders鈥� funds. Companies could be reporting no net asset values at all

John Messenger, vice-president, Morgan Stanley

But he had better be ready for a gruelling battle. Ian Grice, the incoming chief executive of Alfred McAlpine, warns that other contractors will soon close their final salary schemes: "We think the risks and economics of these pensions will make a lot of other people think about such a move. Over the next few years a lot of contractors will consider what we have done."

Although pension problems are seeping into the thoughts of all British industry, construction is one of the worst-hit sectors. Under accounting changes to be made in 2005, deficits in pension schemes will have to be listed on a company's bottom line, so reducing the value of the company. Construction firms tend to have relatively few assets, meaning that deficits have a disproportionate impact on their value. As Bill Tallis, director of the Major Contractors Group, puts it: "It is certainly true that construction companies are relatively lightly capitalised compared with a lot of other industries."

Analysts make the point more starkly. John Messenger, vice-president of investment bank Morgan Stanley, says that most companies in construction will have to close their final salary schemes, at least to new entrants, over the next two years: "With accounting rules changing in 2005, pension deficits will have to be taken off shareholders' funds. In theory, companies could be reporting no net asset values at all."

The accounting change, known as FRS-17, is intended to provide a snapshot of the position of pension funds. It has the potential to weigh heavily on shareholders, causing investors to balk at holding stock in public or private companies with small assets and large pension liabilities. Philip Cleaver, chief executive of privately owned contractor Mansell, which has shut down its final salary scheme to new members, says: "If the pension fund deficit is much bigger than the balance sheet, it will have an impact on the ability of a company to pay dividends."

Understandably, workers are more concerned about themselves and their families than the value of their company, or the financial well-being of investors. Earlier in the year, building materials firm Travis Perkins caused a stir by closing its final salary scheme, but only to new entrants below management grade 鈥� leaving it open to accusations that it was creating a two-tier workforce. The Financial Times said the move showed how "grotesquely divisive" the pensions issue has become. Frank McKay, the chief executive of Travis Perkins, said that there was a "complete misunderstanding" of the new arrangement 鈥� but added that the company's interests had to come first. "It's all about the long-term volatility [of the stock market], protecting the pension fund and the exposure of the company."

More pertinently, McKay pointed out that all employees were given four months' notice that the final salary scheme would be shut to new entrants 鈥� in other words, they had a four-month window to join the scheme: "Take-up wasn't high," says McKay. But the subject of pensions is a complex one, and it has to be asked if Travis Perkins' staff really appreciated what they stood to gain, and lose.

Rok has sought to pre-empt accusations that it is creating a two-tier workforce and that it has failed to explain the issue to its staff. On 1 October, it will shut down three schemes, two of which are final salary, and replace them with a single money purchase scheme called the Rok Plan. Unlike some of the old schemes, this will be available to blue- and white-collar workers. It is also offering independent financial advice to its workers. As with staff at Alfred McAlpine, the 300-plus Rok employees in the final salary schemes will not lose the contributions that they have made to these pensions. But Rok has recognised that these workers may not understand what they should do with the money that they have already built up. Paul Wilkinson, Rok's people director, says: "What we have said to people is that we will give them 拢100 each to buy time with an independent financial adviser. What they have accrued in the bank is safe."

Several contractors have told 好色先生TV that they do not intend to follow Rok, Alfred McAlpine and Montpellier into closing their final salary schemes to current contributors. A spokesperson for Carillion said that although the company had revised the amount that it is going to have to spend to keep its pension fund afloat this year from 拢18m to 拢20m, it does not believe the burden to be large enough to warrant closing the scheme to existing members. And at Mansell, chairman Eric Anstee said in the company's annual results in April that a review of the final salary scheme, still running for existing contributors, was under way. The contractor has since concluded that the pension package is too important to its employees to risk rocking the boat by closing it to existing members.

It鈥檚 all about the volatility of the stock market and the exposure of the company. The company has to come firs

Frank McKay, chief executive of Travis Perkins

Morgan Howarth, finance director of Glasgow-based housebuilder and contractor John Dickie Group, goes even further, virtually spitting blood in denouncing what he sees as a vast exaggeration of the deficit problem. "If you firmly believe the equity market is dead, then it might hold water, but if you think that the equity market has any chance of recovering at all, that deficit could be overturned overnight. Remember, a fund might have 25 years to recover."

Nevertheless, Howarth makes his protestations shortly after confirming that John Dickie has shut its final salary scheme to new members 鈥� replacing it, naturally, with a money purchase equivalent. The move was a response to an increase in the group's pension deficit. This rose to 拢1m, up from 拢434,000 in 2002.

Howarth may well be exasperated by people's lack of understanding, but even he cannot promise that the company's final salary scheme will survive forever. Indeed, few companies are ruling out closing their schemes in the long-term; even the most bullish directors admit that the stock market is too volatile to be able to guarantee the security of their funds.