Prudential in strike threat over DC move

UK - Amicus, the UK’s largest private sector union, is threatening strike action following major insurer Prudential’s decision to change the pension scheme for new employees from a defined benefit system to a defined contribution system.

When Prudential announced its decision at the end of September, Amicus described the move as “shameful”, and Roger Lyons, joint general secretary at the union has stated that unless talks are held between the two parties then a strike will be discussed.

As the DC scheme applies only to new employees, and those currently employed at Prudential will retain their final salary schemes, the question is posed “who will strike?”, but a spokesman for Amicus explains: “many employees feels this is the thin end of the wedge. Current employees under the DB scheme will be more expensive to Prudential than the new employees which are contributing to their own pensions. Current workers are therefore feeling vulnerable. “

With Prudential also looking at cutting costs by transferring 850 positions to India, workers under the final salary scheme feel they will be the first to be redeployed or made redundant.

Prudential maintains that the DC scheme is being established, not as cost-cutting procedure, but as it will be a better arrangement for its new employees. The plan allows for contributions of up to 18% with Prudential contributing up to 12% of basic pay and employees a maximum of 6%. It also maintains the new scheme also offers better death and illness benefits than the final salary scheme.

Mark Wood, head of Prudential’s UK operations says that management is in ongoing discussions with the union, and will continue to consult employees.”

Prudential hopes to introduce the new DC plan to new employees in the first half of 2003.

Strike action against companies which change their pension scheme is becoming more frequent. In the summer, employees of UK steelworks Caparo succeeded in having their final salary scheme reinstated when they became the first to take strike action to protect their pension rights. The Trades Union Congress, representative for seven million employees in the UK, has also encouraged workers to strike to protect their pension rights.

Have your say

You must sign in to make a comment


Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2570

    Asset class: Direct Real Estate.
    Asset region: Europe excluding Switzerland.
    Size: 150m.
    Closing date: 2019-10-30.

Begin Your Search Here