WH Smith to close DB scheme to current members
UK - Major retailer WH Smith and newspaper distributor Smiths News are to close their defined-benefits (DB) pension funds to existing members.
Smiths News, which demerged from WH Smith in August 2006, closed its final-salary pension scheme to new members in 1995. The current proposals, which are subject to a 60-day consultation period, will not change benefits already earned.
The companies split the pension funds' assets and liabilities under powers outlined in the 2004 Pensions Act but left a total deficit estimated at £41m (€61.6m). Despite a one-off £25m payment into Smiths News at demerger, and ongoing annual payments of £5m, the Smiths News pension fund now carries a £17m deficit.
Smith News hopes pension fund members will acknowledge the proposals as fair because they eliminate inequalities between those defined-benefits and defined contribution contributors.
However, Ann Field, a spokeswoman for trade union Amicus, which represents Smith News employees, said: "Who would have thought that ‘fair' meant taking pension benefits away?'
She suggested that the firm had effectively mis-sold a DC scheme in the 1990s when it offered larger employer contributions in return for opting out of defined benefits. Instead, it has offered to match employee contributions of 0.5-5%.
The closure of the DB scheme will affect around 2,000 (11%) workers at WH Smith. Yet Amicus argues that the likely impact at Smiths News - which claims only 700 of its 4,300 employees will be affected - could be harsher because most are low-wage night-shift workers. "These are people barely 30p [€0.45] off the minimum wage," she said.
She added: "In two words, what this is about is boardroom greed. It's a high street name offering backstreet conditions."
Amicus has said it will ballot to strike as a last resort. "We haven't taken the threat off the table, but we haven't put it on the table, either," said Field.