CLYDESDALE Bank last night became the latest British company to shut its final salary pension scheme to existing members after proposing to move about 3500 scheme members to an inferior "career average" scheme from April 1.

National Australia Bank, which owns the Clydesdale and Yorkshire Bank, is also making a one-off contribution of [GBP]100m across its UK pension schemes in an attempt to cut the soaraway [GBP]426m deficit. NAB's UK business made profits of [GBP]290m last year.

David Thorburn, chief operating officer of both NAB's UK banks, admitted the change was a diminution of benefits for final salary scheme members, saying: "Yeah, but it's a very marginal reduction in benefits for most people."

He said it was not possible to quantify how much worse off this would leave staff upon retirement, because each case would be different. However, he claimed the change was better than doing nothing, and continuing to watch the bank's pension deficit balloon.

Final salary pension schemes pay benefits linked to the salary that staff earn in their final year at work. Those currently in the scheme will accrue benefits up to March 31.

The shift to a career average plan - which will remain noncontributory - from April 1 means benefits thereafter will be linked to the average salary that an employee earns during a period of service and are typically less expensive to companies.

Thorburn insisted the measures adopted by Clydesdale and Yorkshire "compare favourably" with those being put in place by other UK firms.

"It's a very carefully thought through solution, " he said.

Scotland's other two banks operate very different pension schemes to Clydesdale.

HBOS, which has closed its final salary scheme to new members, recently said it would "pick up the tab" for the [GBP]1.8bn shortfall in its four main final salary pension schemes, effectively wiping out the deficit over the next 10 years.

James Crosby, chief executive of the merged Halifax/ Bank of Scotland, said the pension deficit is "a debt like any other".

Royal Bank of Scotland last year also pumped [GBP]750m into its non-contributory final salary scheme, which is still open to new members.

Royal remains committed to upholding its end of what its chairman, Sir George Mathewson, once termed the "emotional contract" with staff to maintain the scheme.

Asked what Thorburn had to say to the thousands of Clydesdale employees who will wake up this morning worse off as a result of the change, he said: "I feel very strongly that that's misleading."

He again stressed that doing nothing would have had far worse long-term consequences for members. "In actual fact, our employees can wake up and feel a lot more positive tomorrow, " he claimed, adding: "At the end of the day, they (scheme members) are going to get a chance to vote, so we'll see how they are feeling."

The proposals will be put to a ballot of the 8000 members of NAB's three UK schemes - including 3500 in Clydesdale's final salary scheme, and the 1500 in the Glasgow-based bank's defined contribution, or money purchase, scheme. The balance of members are in Yorkshire Bank's scheme and a small National Australia Bank (UK) scheme.

The ballot will take place between February 22 and March 15.

Mary Alexander, Amicus's national officer for NAB employees, said: "We believe that the pension changes being proposed by NAB are the best that can be achieved through negotiation and now it's up to members to decide how it will affect them."

NAB's move to a career average pension is similar to that taken recently by the Co-op.

A spokesman for the National Association of Pension Funds said: "It's a less generous option than a final salary scheme, but it is still a decent pension for most."

Additionally, the bank is also proposing to introduce inflation protection from April, so that any annual pension increases will be capped at 2.5percent, or the annual rise in the Retail Prices Index, whichever is lower.