UK – Union anger at closure of company defined benefit pension schemes has led to a reversal at Network Rail and a spat with private equity firm, CVC.
The RMT rail union after threatening a strike for Tuesday successfully negotiated the re-opening of the £12bn Railpen scheme to new members who have worked for the company – or one of the track operating companies - for five years. The scheme closed in April and a defined contribution plan put in its place.
Bob Crow, general secretary of the RMT, told the FT: “We had been told we were living in a dream world and that we had no chance of getting this scheme re-opened.”
Network Rail chief executive John Armitt said: “This confirms my belief that this dispute was always best resolved through talking rather than striking. We had reached agreement on the issues of pay and travel some weeks ago, and I am pleased now that the pensions issue is resolved too.”
Separately, the Transport and General Workers Union sent out a press release blaming Akzo Nobel UK over the decision to close their final salary pension scheme by the end of July. Peter Booth, T&G national organiser for manufacturing, said he was writing to the company and Malcolm Wicks, UK Pensions Minister, as one reason for the closure was the proposed cost of the Pension Protection Fund, which has been proposed in the Pensions Bill due to be passed next spring.
The main issue for T&G is over Corsardi, in which Akzo Nobel holds a minority stake, as it said it would pull out of the Akzo Nobel pension fund (the +£1bn Courthaulds Pension Scheme). The position is complicated, however, as Consardi is 68% owned by private equity firm CVC Capital Partners and a provision within the rules of being members of Courthaulds Pension Scheme is that the owners can pull out if a business if sold. Consardi has sold Acetate thereby allowing it to trigger its departure.
Consardi declined to comment and Akzo said the decision was down to Consardi’s management and participating owners. But its move has come during a fraught period for private equity firms dealing with company pension funds.
Permira has broken off plans to buy WH Smith for £940m due to pension fund trustee concerns about the impact of so much debt on the company balance sheet. Consultants have estimated that 20% of UK firms have such poison pill arrangements within their firms from the pension fund trustees. Philip Green is investigating the pension fund deficit at Marks & Spencer before deciding whether to bid an estimated £9bn.
Francis Fernandes, partner at consultants Lane Clark & Peacock, said: "This week, we have seen pensions possibly scuppering takeovers and leading to threats_of strike action. As many employees nowadays are so concerned about their pensions, we see the unions gaining power as they seek to defend workers' rights.
"Any companies hoping to make changes to pensions should look at what's happened here - even the best-laid plans can come off the rails if workers are unhappy enough. I expect this case will not be an isolated incident - pensions are going to continue to feature high up the union agenda for some time yet."
The National Association of Pension Funds said Ernst & Young and Caparro had been re-negotiating closure of their pension schemes and John Lewis Partnership had agreed increased contributions with its workers rather than shutting to new members.