UK - Unions will increasingly be forced to accept the closure of final salary pensions to keep firms afloat, a law firm predicts.
Wragge & Co believes banks and private equity firms will demand that stricken firms close their defined benefit schemes as a condition of any rescue package.
Air Canada is currently in talks with unions over a possible rescue package, which is reliant on the company’s move from DB to DC.
Wragge & Co partner Jason Coates said final salary pension issues were increasingly bec-oming a major factor in UK corporate business.
He said: “The Air Canada case demonstrates a further development that we could see more of here.
“Unions in the UK are understandably resisting attempts to move away from defined benefit provision, but if they find corporate survival depends on financing, and that financing is conditional on ditching the final salary scheme, then the unions are caught between a rock and a hard place.”
He added: “It does seem that banks and private equity houses in the UK are likely to require an employee and/or union agreement to a move to DC ahead of any deal being made.”
Transport and General Wor-kers’ Union spokeswoman Claire Ainsley said each case would be judged on its individual merits.
She said: “As yet we have not seen these kind of demands built into a rescue package but we would not rule out acceptance if it was in the best interests of members.”
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