UNION leaders last night welcomed a deal that will save the final salary pension scheme for thousands of workers at steel company Corus.

Corus, which employs thousands in the North-East, has agreed to end its pensions contributions "holiday" from April, while employee contributions will increase from five per cent of salary to six per cent.

The final salary scheme will be retained, although a working group has been set up to review arrangements for new entrants over the next year.

The GMB union announced it would consult its members on whether to accept the deal.

National officer Keith Hazlewood said that retaining the final salary scheme was the number one priority, adding: "This new package secures this objective in a fund that is currently in surplus."

Michael Leahy, general secretary of steelworkers' union Community, said: "We are pleased to have secured the final salary pension scheme. It is good news for the workforce and for future employees."

David Lloyd, Corus's executive director, finance, said: "While the British Steel Pension Scheme remains well funded, in making these changes we are recognising the increasing costs and risks affecting UK pension schemes and balancing the interests of all stakeholders."

The scheme has 23,000 active members, 50,000 deferred members and 100,000 pensioners.

Corus had not paid into its plan for three years and has a surplus of £53m, contrasting with many other schemes, which are heavily in deficit. It will resume paying in April.

Many companies have been closing their final salary pension schemes to new entrants, sparking renewed fears of a looming pensions crisis. They claim the ageing workforce, low yields on bonds and tough regulations make the schemes unaffordable.

In recent weeks, employers including the Co-op, Top Shop and Burton group Arcadia, and Rentokil have cut back on their pension provision.