Changes to the Nestlé pension scheme that could mean that 7,600 workers losing thousands of pounds in retirement income should be put ‘on hold’ until a proper valuation of the scheme in December.
Unite and the GMB union are ‘totally opposed’ to Nestlé’s plans to close the defined benefit scheme, currently offered on a career average basis, and replace it with a defined contribution or ‘money purchase’ scheme.
In a letter to the company, Unite national officer for the food and drink sector Julia Long and the GMB national officer for the manufacturing sector Stuart Fegan said that the unions were not engaging in the consultation process as it is ‘a fait accompli on introducing these detrimental changes’.
The two unions are calling for the consultation process to be suspended ‘in favour of constructive negotiations’.
“We are aware that an actuarial valuation of the scheme is due to take place in December 2015 which would, in our view, provide us a more informed position on the health of the scheme and be the logical point to discuss what actions may be required from all stakeholders to maintain the sustainability of it,” the letter read.
“In this sense, we believe Nestlé is acting in a precipitous manner.”
The unions argue that Nestlé can well afford to maintain the present defined benefit pension scheme, as it is making increasing profits in the UK and in international markets, and can’t blame the long period of low interest rates and low gilt returns for the proposed changes.
“The company has placed the sole part of its case on the current economic position rather than sufficiently evaluating what Nestlé could lose by making these changes to the scheme in terms of retaining a skilled workforce within the business and the employee engagement that the defined benefit scheme contributes to Nestlé,” the letter added.
Earlier this month, the unions accused the company of an ‘act of betrayal’ as the proposals backtrack on pension changes introduced five years ago which saw the final salary pension scheme scrapped for a career average scheme on the understanding that it would be an industry leading scheme. A ‘money purchase’ scheme was also introduced at the time.
If the current proposals go ahead the career average scheme will be closed to new entrants from 2016 and closed to future pension build up for existing members from the start of 2017.
Unions say that the changes will affect workers making Nestlé products across the UK ranging from pet food and bottled water to confectionary and breakfast cereals.