The pension reform should be delayed until December to allow time for a full assessment of its impact on employees, the unions said in a joint statement.
Nestlé’s plans to close its defined benefit scheme, currently offered on a career average basis, and replace it with a defined contribution or ‘money purchase’ scheme, said Unite, which “totally opposed” the idea.
The giant manufacturer was treating the pensions consultation process as “a fait accompli on introducing these detrimental changes”, complained Unite national officer for the food and drink Julia Long and GMB national officer for manufacturing Stuart Fegan in a joint letter to the firm.
‘A more informed position’
“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,” continued the letter.
“In this sense we believe Nestle is acting in a precipitous manner.”
Nestlé said it regrettably planned to close the defined benefit scheme because it was not financially sustainable.
“The costs and risks of providing past and future pension benefits have increased far more than anyone could have predicted,” it said in a statement.
Pension challenge
“The pension fund had a deficit of £850M at the end of 2014, despite the company contributing over £600M in additional payments to reduce the deficit in the last few years.”
- Nestlé
“The pension fund had a deficit of £850M at the end of 2014, despite the company contributing over £600M in additional payments to reduce the deficit in the last few years. We are very sorry that we have to propose these changes but we believe they are necessary under the circumstances.”
Consider all sugestions
The firm added that it was committed to an “open and meaningful consultation”, and would consider all suggestions and proposals from employees and their representatives.
But the unions argue Nestlé can afford to maintain the present defined benefit pension scheme, as it was making increasing profits in the UK and in international markets. It cannot blame the long period of low interest rates and low gilt returns for the proposed changes, according to the union leaders’ letter.
Earlier this month, the unions accused the company of an “act of betrayal”, claiming the proposals backtrack on pension changes introduced five years ago. As part of that deal the final salary pension scheme was scrapped for a career average scheme on the understanding that it would be an industry leading scheme, said the unions. 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.
The unions claim the changes will affect workers making Nestlé products across the UK and Ireland ranging from pet food and bottled water to confectionery and breakfast cereals.