Nestle U.K., Gatwick, England, announced Thursday it plans to freeze its defined benefit pension scheme.
The plan, with £3.78 billion ($5.87 billion) in assets as of Dec. 31, will be closed to new hires effective Jan. 1, 2016, and frozen on Jan. 1, 2017, said Sylwia Gorska, Nestle U.K. spokeswoman.
The plan will be replaced by an existing defined contribution plan created in 2010, Ms. Gorska said. She could not provide the DC plan size.
“Unfortunately, the costs and risks of providing a defined benefit scheme have continued to increase substantially in recent years,” Nestle executives said in a statement. “With regret, the company is therefore proposing its closure and replacement with one of the most attractive defined contribution schemes available.”
Nestle U.K. said in the statement that the plan closing and freeze will be pending negotiations with employees and union representatives.
Neither the $4.52 billion pension plan of Nestle USA Inc., Solon Ohio, nor the company's German and Swiss cash-balance plans are affected by the U.K. move, Mr. Gorska said. Nestle had $24.12 Swiss francs ($24.38 billion) in global defined benefit assets.
The change will affect about 7,600 employees in the U.K.
Neither Peter Tait, chief investment officer of Nestle Capital Management, in-house money manager for the U.K., pension assets, nor Karin Brodbeck, director-retirement investments at Nestle USA, could be reached for comment.