Soft option

About 4,000 employees at AWE Plc – the Atomic Weapons Establishment – are the latest group of UK workers to see their defined benefit pension scheme threatened with closure and an inferior alternative being offered.

The country’s largest union will be balloting its members at the AWE sites at Aldermaston and Burghfield in Berkshire for strike action and/or industrial action short of a strike over the company’s decision to close the scheme on 31 December this year.

The ballot of Unite’s nearly 600 members will open on Monday 17 October and closes on Monday 31 October.

‘Stock market vagaries’

Unite said that there was an accelerating trend of companies closing their defined benefit pension schemes – based on an individual’s career earnings – in order to replace these with defined contribution schemes which rely on the roller-coaster vagaries of the stock market.

The union said that company bosses saw defined benefit pensions as ‘a soft target’ to save money for the benefit of shareholders – the most extreme example being the BHS pensions’ scandal.

Recently, BMW, Gatwick Airport Ltd and the Post Office have all announced that they planning to close their defined benefit pensions – and Unite has pledged to fight the move to the defined contribution option by all these organisations

In the case of AWE Plc, Unite said that the Ministry of Defence (MoD) had reneged on promises on pensions made in the 1990s when the workforce was transferred to the private sector – and if those promises has been honoured it would not have precipitated plans to close the scheme at the end of the year.

‘Extreme disappointment’

Unite regional officer Bob Middleton said: “I have written to AWE expressing my extreme disappointment with its decision to close the defined benefit pension scheme and have pointed out that without the employees’ loyalty, dedication and professionalism the Trident programme could not have been delivered.

“It is a disgrace that the UK government, which is constantly harking on about the importance of the Trident programme, is not prepared to resolve this matter.

“It is also a disgrace that the Ministry of Defence has further stated that guarantees that were previously made to the workforce will be no longer honoured.

“The MoD has confirmed that the responsibility for the deficit is theirs, but also said that the guarantees that were given prior to the transfer of our members in 1992 will no longer be honoured.

“In their words: ‘Nothing lasts forever’.

“If the MoD were to grant the scheme Crown Guarantee, there would not be a requirement to close the scheme, which would result in our members losing thousands of pounds in retirement incomes.

“In 1992, prior to the transfer of our members from the MoD to the private sector, the then Tory junior defence minister Kenneth Carlisle stated that AWE employees had a ‘copper bottomed guarantee’ that they would not suffer a detriment to their current pension when they were transferred.

“The reason given for the proposed closure is that there is a pension deficit, but Unite has argued that, following members increasing their contributions, there has not been an opportunity to establish whether this increase will start to reduce the deficit. It is our view that it will.”

Currently, scheme members pay 10 per cent of their salary into the scheme and the employer pays 28 per cent.

The new pension proposal would involve AWE contributing nine per cent and employees contributing whatever they wished.

AWE Plc is a consortium of three American owned Companies, Lockheed Martin, Serco and Jacobs Engineering.