Serious concerns have been expressed over why two highly profitable water companies – Anglian Water and United Utilities – are proposing to close their defined benefit (DB) pension schemes, thereby greatly eroding their employees’ retirement incomes.
Unite is angry that the huge profits made by these two companies are heavily skewed toward the shareholders – with not enough investment going into the UK’s water infrastructure and also to maintaining the pension schemes.
The chair of the Commons Work and Pensions select committee Frank Field has written to the chief executive of the water regulator, Ofwat, Rachel Fletcher asking for her organisation’s views on the closure of these two schemes.
In his letter Mr Field said, “Water and sewerage companies are natural monopolies which are subject to no competition. They hold a privileged position as long-term licence-holders enjoying large and predictable cash flows from a captive consumer base.
“There appears to be no effective restraint on these firms’ policy of distributing massive sums to shareholders while cutting the pension benefits that their employees are counting on for their retirement.”
He pointed out that the last five annual reports from Anglian Water showed after tax profits of £1.6bn, of which £0.8bn was paid out in shareholder dividends. United Utilities made £1.6bn in after tax profits during the same period, with £1.2bn going in the pockets of shareholders.
The MP for Birkenhead asked, “What requirements can Ofwat place on the companies it regulates in respect of their allocation of company resources to a) shareholder dividends; b) executive remuneration and c) pension scheme funding?”
A thousand Unite members employed by United Utilities in the north west of England have recently taken industrial action in a pensions’ dispute which could see them thousands of pounds worse off in retirement.
They were protesting at the closure of their final salary pension scheme on April 1, 2018 which is being replaced by a hybrid scheme. Industrial action is currently suspended for further talks to take place.
Workers at Anglian Water have accepted the changes to the pension scheme, even though Unite warned that some staff will see their pension pots reduced by up to £100,000.
Unite acting national officer for energy and utilities Peter McIntosh said, “Frank Field is on the right track in demanding that Ofwat gives clear answers as to its stance on these defined benefit scheme, aka final salary, closures.
“It is clear that the financial rationale of these water companies is tilted far too heavily in favour of short-term gains for the shareholders and not enough emphasis on the price needs of the hard-pressed consumer; the requirement for substantial investment in the infrastructure; and the safeguarding of retirement incomes for dedicated workers.
“A line in the sand needs to be drawn, otherwise the pensions of thousands of water workers will be seriously eroded by shareholder-obsessed bosses.”