UNIONS have criticised plans by two of Britain's biggest employers to scale back their pension schemes.

The Co-operative group is to scrap its final salary pension, while fashion group Arcadia has told workers they must work another five years for theirs.

The news comes amid warnings by industry groups that pension plans must be reformed to avoid closing them down altogether.

The Co-op, which employs 70,000 people in sectors such as retail, funeral homes, insurance and banking, has said it wants to end pensions based on final salaries.

Instead, the company wants the pensions to be based on average salaries.

The Transport and General Workers' Union said the proposals would not be accepted as a "foregone conclusion" and would not rule out a ballot on industrial action.

The Union of Shop, Distributive and Allied Workers (Usdaw) said it was "massively disappointed", and had urged the company to put more money into its scheme.

Changes at Arcadia are due to come into force in March, only months after boss Philip Green awarded himself a £1.2bn bonus from the company, which owns Burton, Dorothy Perkins, Top Shop and Miss Selfridge.

Arcadia will raise its standard retirement age from 60 to 65 and has told staff they must increase their contributions from four per cent to six per cent of their salary or see their pensions fall.

The announcements from the Co-op and Arcadia come only weeks after Rentokil Initial announced changes to its pension plan.