A new defined benefits pension scheme is being offered to some Northumbrian Water Group employees to replace an existing final salary scheme which the company says is "no longer sustainable."
The Group, which includes Northumbrian Water and Essex & Suffolk Water, is proposing a new Career Average Revalued Earnings (CARE) scheme - the company will contribute 19.5% and members will add 8%. The Group has committed to pay £110 million into the scheme over the next five years and will also absorb increased annual National Insurance costs of £1.5million.
Richard Warneford, Northumbrian Water Group’s Wastewater Director and Chair of the Pensions Consultation Group, said:
“We understand that our employees would like the final salary pension scheme to stay the same, however this is no longer sustainable.
“Many of our customers will have already seen changes to their own pensions with businesses being forced to close final salary schemes as costs have risen in challenging economic times and deficits have increased as people live longer.
“After eight months of extensive, inclusive and transparent consultation for all 1600 employees in our final salary scheme, the new pension plan has already been revised twice. That collective consultation will conclude on 1 September when all feedback received will be reviewed to shape the final outcome.
“We are committed to pay £22m into the scheme every year until at least 2020 and the new CARE scheme will provide a very good pension scheme for members which still compares very favourably with what other companies offer and will be one of the best in the water industry.”
The pension consultation has extended to around 1600 people of NWG’s 3,100 strong workforce in the North East and in Essex and Suffolk who are currently members of the final salary scheme.
A defined contribution pension scheme was put in place for people who joined the company after 31 December, 2007.
“Contingency plans in place” in event of industrial action
Northumbrian Water shared the financial position of its final salary scheme in January 2015 with the Trade Unions and briefed around 1600 colleagues face to face. There have been eight subsequent meetings with the 35-strong consultation group with members of the scheme informed after every meeting.
The deadline for concluding consultation has been extended three times and the company’s proposal has been revised twice in response to feedback from scheme members and their representatives.
Richard Warneford added:
“We are aware that the Trades Unions plan to undertake a ballot. Our priority will always be to safeguard our service to customers and to protect the environment.”
“Should some employees decide to take industrial action we have contingency plans in place to respond to any impact this may have in the communities we serve.”
Collective consultation will now conclude on the 1st September when feedback will be reviewed to shape the final outcome. Final details of the company’s new defined benefit CARE pension scheme will be announced on 10th September.