Bentley Workers Mull Strike over Pension Closure

In a move toward a possible strike, workers at Bentley Motors headquarters in Crewe, UK, have voted in support of industrial action in a consultative ballot over plans to close the company’s defined benefit pension plan.

Members of union Unite, including car production workers, senior staff, and managers, backed a strike action by an overwhelming 98% on a 92% turnout in the consultative ballot. The union warns that the move to close the pension plan could cost Bentley workers tens of thousands of pounds in retirement income a year.

“This massive vote in favor of action demonstrates the anger and strength of feeling among workers over Bentley’s pension proposals,” Phil Morgan, Unite regional officer, said in a release.

According to Unite, the proposal to close the defined benefit plan would affect 1,200 Bentley workers, who are members of the Rolls Royce and Bentley Pension Fund (RRBPF). Unite said it will now make arrangements to hold a full statutory industrial action ballot, which could result in a strike, unless Volkswagen-owned Bentley nixes the idea of shuttering its pension.

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“The union has presented counter proposals to the company as an alternative to the proposed closure of the pension,” said Morgan. “We would urge bosses at Bentley and its parent company Volkswagen to listen to the workforce and further engage in meaningful talks with Unite aimed at reaching a mutually acceptable position.”

Earlier this year, Bentley workers in Crewe received a letter from the company saying that a consultation would be held to review the winding down of the pension plan, which has been closed to new members since 2012.

“Although entering into a consultation is not an easy step to take, and no decisions have been made, the RRBPF deficit is more than £500 million and the cost of funding the scheme has increased by 50% in the past five years,” said a company spokesperson in January, when workers staged a short protest over the matter, according to news reports. “While funding is in place to secure members’ contributions, the ongoing level of financial risk is unsustainable.”

According to the company, the proposal will affect 28% of Bentley employees, who are still accruing benefits in the defined benefit plan, while the remaining employees will be enrolled in a defined contribution plan.

Tags: Bentley, Rolls Royce, strikes, Union

After realizing a profit for the first time in 10 years, the £738.1 billion ($1.05 trillion) Royal Bank of Scotland plans to contribute $5 billion to its pension fund over the coming years. The proposed payment is an attempt to address the “historical funding weakness.”

Under the memorandum, which the bank entered Tuesday, the payments will begin with a pre-tax contribution of £2 billion in the second half of 2018. To match dividends, additional contributions of up to £1.5 billion will continue from 2020 on. The money for both payments will come from the bank’s core capital reserves.

“With these proposed payments, together with the one-off contribution into the Fund in Q1 2016, we will have substantially addressed the historical funding weakness that existed in the Fund and brought clarity to future funding arrangements,” Ewen Stevenson, the bank’s CFO, said in a statement, calling the move an “important milestone.”

In February, the bank’s 2017 annual report revealed its first profit in a decade. The payments will settle the bank’s issue of not paying a dividend over that timeframe due its inability to produce gains.

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Due to poor investment returns resulting in funding issues, 71% of the bank is currently owned by the state after 2008’s £50 billion government bailout.

In addition, a ring-fencing law will split RBS’s investment banking unit from its UK-focused retail banking business, resulting in the creation of two pension plans—one inside the ring-fence, the other out. Reuters reports that the outside scheme could be exposed to higher risks, as well as companies outside of the fence being unable to participate in the same defined benefit plans as fenced-in entities.

Ring-fencing is a protection-based transfer of assets typically done via offshore accounting. The purpose of a ring fence is to protect assets from inclusion in an investor’s net worth or to lower tax repercussions.

Starting in 2019, Royal Bank of Scotland’s investment bank will be renamed NatWest Markets. From 2019 on, NatWest and the bank’s international business will no longer participate in the RBS’s main pension scheme. Instead, the two entities will be transferred to the outer ring plan. The same will apply for outer-ring entities of the bank’s main pension scheme in 2026.

Tags: Pension, Royal Bank of Scotland, UK