Michelin considers UK scheme closure
UK - The French tyre manufacturer is considering to close the defined benefit scheme for its UK operations to future entrants and accruals as of 2009.
The pension plan with assets in excess of £1bn (€1.5bn) is to be replaced with a defined contribution scheme according to the company's plans.
However, accrued benefits will stay untouched, a spokesman for Michelin confirmed to IPE.
Rising longevity assumptions and a deficit of £250m, despite a cash injection, apparently led the management to take the decision and a defined contribution scheme was considered the only way to ensure adequate pensions for the workers in the future, said the spokesman.
Union officials have criticised Michelin and fear the retirement provision of over 3,000 workers at Michelin's Stoke-on-Trent factory will be "thrown into chaos".
But Michelin stressed the full closure of the defined benefit scheme was so far only a proposal and talks with employees will begin in June over a two-month period.
"We will go into the consultation with our eyes open and we'll call for meaningful talks and serious consideration of alternatives to closure but our fear is the company has made its mind up," said Rob Taylor, The Transport and General Workers Union's convenor at the Stoke plant.
Meanwhile, an employer survey conducted by Aon Consulting among 150 UK companies suggests by the middle of 2011 the number of defined benefit closed to future accruals might treble - bringing the number up to half of all currently active DB schemes.
Aon says alternatives such as hybrid schemes and contracting back into the State Second Pension scheme are "being actively considered" by employers opposed to closure.