RHM workers may strike over pension reform
producer RHM if they wish to vote on strike action after the
company became the latest in the UK to announce an overhaul of its
pension scheme due to funding problems, reports Chris
Mercer.
Amicus, Britain's largest private sector union, called the move a "draconian attack" on its members' benefits and said it was prepared to ballot workers over what it claimed were RHM's "plans to freeze the level of pensionable salaries, by changing the basis of pensions calculations from the pensionable salary that workers receive at retirement to their existing salary levels".
RHM, which owns bread brands Hovis and Mother's Pride as well as Mr. Kipling cakes, said changes to its pension scheme were necessary to reduce a £525 million pension fund deficit brought on by falling stock markets, low interest rates and increased life expectancy.
The reforms, to be phased in between April and September this year and affecting 9,800 workers, are set to include new pension contribution rates, new definitions of pensionable earnings, lower national insurance costs, limits to discretionary pension increases paid in retirement and limits on early retirement terms.
John Allott, Amicus national officer for the food and drink industry, said: "RHM is attempting to slice our members' pensions. These changes will result in less risk and lower contributions for the company and greater contributions with much poorer returns for our members."
A decision on whether or not to ballot members for strike is expected within the next two weeks.
Andrew Allner, RHM finance director, retaliated, saying: "This action is being taken to safeguard the future of the RHM group pension scheme and we have been able to retain our defined benefit scheme. The spiralling cost of funding company pensions is well recognised, and RHM is not immune from these pressures.
"Over the past three years the company has increased its contributions and now pays four times more than the members. It is important therefore that scheme members play their part in funding the reduction of the company's pension costs." The firm said existing pensioners would be largely unaffected.
A number of British companies, and even the government, have had problems maintaining workers' pension funds due to stock market mishaps and the sheer strain of the country containing more and more people over retirement age.
Britain's 2001 census showed for the first time that the country had more people over 60 than under 16. About a sixth of the UK's 60 million population was in retirement age (women over 60, men over 65).
This week the UK government announced a flat-fee charge on companies' pension funds to help pay for the Pensions Protection Fund (PPF), which it set up last year after many final salary pension schemes collapsed. The PPF was designed as a safety net against a loss of retirement savings, but only for employees on final salary/defined benefit schemes.
Employers are expected to pay into the fund on their employees' behalf and the new rates include £15 for active fund members, £15 for every pensioner and £5 for each deferred member.
