The move by the Unite trade union comes despite it previously taking action against companies that have proposed similar steps
Labour’s biggest union backer was accused of hypocrisy last night for proposing to scrap its staff final salary pension scheme.
The move by the Unite trade union, which represents more than 1.4million workers, comes despite it previously taking action against companies that have proposed similar steps.
The change has been prompted by the need to tackle the deficit in the union’s pension scheme.
A letter to scheme members outlined the decision to move them ‘from a final salary to a career average revalued earnings (Care) benefit structure’.
It said the move ‘reduces the risk of funding deficits’ as it is easier to predict – and claimed it ‘does not necessarily provide lower benefits than a final salary scheme’.
A final salary scheme pays out an income based on the wage at the time of retiring, while a Care scheme calculates the salary average across a worker’s career.
But a document on Unite’s website suggests switching to a Care scheme ‘will be calculated as reducing the cost of pension’ for employers.
Unite has also proposed raising the ‘normal retirement age’ for its scheme from 63 to 65 and increasing the average contribution rate from employees.
There have been several occasions in recent years where Unite moved against companies proposing to scrap their own final salary pension schemes.
In December, union members at Aston Martin voted for strike action. A few months earlier, hundreds of members at the Stanlow oil refinery voted for similar steps over the ‘proposed closure of the pension scheme’.
Action was also taken in June against General Electric, as well as at Delphi Technologies and Glasgow and Aberdeen airports in 2019.