UK - The Transport and General Workers Union (T&G) has reacted angrily to Michelin's decision to close its final salary pension scheme.
The company rationalised its decision with reports that its pension fund’s deficit was £260m at the end of 2006, up from £57m in 2002, despite a £100m cash injection over this period.
A Michelin spokesman added: “In addition, the Government has introduced a number of changes affecting UK pension schemes, forcing employers and trustees to reconsider how their schemes are funded and run.”
Michelin said increased longevity had been a factor for shifting from direct benefit (DB) to a direct contribution(DC) scheme, a move which began in 2005.
The T&G said that 4,000 people across the UK would be affected and greeted a consultation period beginning on June 1 with cynicism.
T&G convener at Michelin’s Stoke plant, Rob Taylor, said: “We will go into the consultation with our eyes open and we’ll call for meaningful talks and serious consideration of alternatives to closure but our fear is the company has made its mind up.”
T&G national secretary, Phil McNulty commented: “Everything we know about money purchase schemes shows they leave people worse off in retirement.”
McNulty added: “We’ll work hard in this consultation to put pressure on Michelin to think again especially as many of the reports on pension funds are now showing improvements in fortunes which render pensions being slashed unnecessary.”
Michelin has proposed stopping further DB pensions after 1 January 2009 with remaining DB pensions linked to future salary increases based on members’ final salary.
Michelin concluded: “The company and the trustees are in discussion with regards to a recovery plan which sees the Company paying off the deficit over the next 10 years.”
A £20 million lump sum was paid into the plan in March 2007.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.