GMB Members At United Utilities Official Industrial Action Ballot Over Cuts To Pension Scheme From 1st April 2016
The company claim that the scheme as it stands now, without any potential increases in future costs, is unsustainable despite evidence to the contrary says GMB.
GMB members employed by United Utilities (UU) in the North West are to take part in an official ballot for industrial action on the company’s plan for all staff to move from a defined benefit final salary pension to a defined contribution pension scheme after 31 March 2016. This ballot coincides with strike ballots for the other unions in the company.
The ballot follows an overwhelming vote by members in a consultative ballot to reject the company plan. See notes to editors for copy of previous GMB press release on the issue. The ballot opens today (12th January) and will conclude on 26th January.
The consultative ballot followed a GMB meeting with senior representatives of the company on 16th October to commence consultation on pensions. The company began a formal 60 day consultation on 16th November which will conclude in mid-January. A number of consultation meetings took place in December with the most recent meeting taking place on 5th January when the company agreed to extend the consultation period but not withdraw the closure of the scheme.
Eddie Parker, GMB regional officer, said “During the consultation process the company responded to JTUF’s request for UU to withdraw the proposal to close the pension scheme pending the outcome of the full triennial actuarial valuation, at which point meaningful consultation could then begin afresh with JTUF having been supplied with up to date, definitive facts and figures.
The company refused JTUF’s request to withdraw the proposal. Instead the company offered to extend the consultation into June 2016. This in no way satisfies JTUF’s request for the issue to be ‘properly dealt with in a sensible manner without time constraints’ and doesn’t even satisfy the statutory minimum 60 day consultation requirements, as would be case had the company accepted JTUF’s request to begin afresh once supplied with this crucial information.
The company’s stance is inconsistent at best. For example, their rationale for the expected increase in future service costs is heavily dependent on numerous assumptions including market conditions and investment performance e.g. life expectancy, return on investments and long-term interest rates etc. Yet when asked whether the company will benefit from circa an additional £20m p.a. once the pension deficit is repaired post 2020 the company response is ‘The current plan is that the existing deficit will be fully funded by 2020 however this is heavily dependent on a multitude of assumptions including market conditions and investment performance and so we would be cautious to assume that from 2020 the company will not need to contribute further’.
On one hand the company expects JTUF to accept that the pension scheme must close due to predicted rising future service costs, whilst on the other hand they state that similar such assumptions should be approached with caution when challenged about the additional £100m per AMP the company will have at their disposal post 2020.
Further evidence of inconsistency can be found in relation to UU’s claim that only a company contribution rate in the ‘teens’ is acceptable going forward. When challenged, the company have now confirmed that they actually built in a request at the current contribution rate of 26.5% as part of the PR14 submission. However they appear to be unable to confirm or deny whether or not this was actually accepted, despite no apparent protests from Ofwat.
JTUF has seen no evidence whatsoever as to why a FTSE 100 company which operates within a stable monopolised industry, with guaranteed revenue streams and extremely healthy long term profits and dividend returns, cannot absorb and/or mitigate any potential additional costs related to future pensionable service in order to protect employees within the DB pension scheme.
Throughout the consultation process to date, the company have not once suggested that they are willing to put an extra penny into the pension scheme in order to protect those affected. The company claim that the scheme as it stands now, without any potential increases in future costs, is unsustainable despite evidence to the contrary.
At the most recent meeting on January 5th, JTUF offered to withdraw their formal written notice to ballot for industrial action in exchange for the company withdrawing their proposal to close the scheme in order to allow meaningful consultation to take place. Unfortunately the company have chosen to decline this offer.
Members of all four Unions made it clear via the consultative ballot result that they reject the company’s proposal to close the pension scheme. Given UU’s continued intransigence on this matter, JTUF now view the consultation as merely a fait accompli with no real will or effort on the company’s behalf to protect the scheme and their employees. We believe the company’s mind was made up from the outset of this process and at this point in time JTUF can see no further real progress being made through talks alone. That is why we are moving to the industrial ballot.”
Contact: Eddie Parker 07740 804046 or Eamon O'Hearn 07918 777097 or GMB press office 07921 289 880 or 07974 251823 or 07860 401860.
Notes to editors
1 GMB press release dated December 1 2015
GMB Members At United Utilities Overwhelming Vote To Reject Cuts To Pensions From April 2016
We are considering alongside the other unions the next steps with the possibility of moving to an industrial action ballot says GMB.
GMB members employed by United Utilities have voted by a massive margin in a consultative ballot to reject the company’s plan for all staff to move from a defined benefit final salary pension to a defined contribution pension scheme after 31 March 2016. See notes to editors for copy of previous GMB press release on the issue.
The consultative ballot followed a GMB meeting with senior representatives of the company on 16th October to commence consultation on pensions. The company began a formal 60 day consultation on 16th November which will conclude in mid-January.
Eddie Parker, GMB Regional Officer, said “The company 60-day consultation on the proposal can hardly be called a consultation when the Company has already declared that it wants to close the scheme before talks have even commenced.
The proposal is another blow to hard working members at United Utilities who had already accepted cuts to their pensions to keep them sustainable.
The Company has enjoyed a £226M tax windfall over the past 5 years, due in part to low interest rates. It is now proposing to close the scheme because low interest rates are affecting future liabilities. You can't make it up.
United could have paid off the deficit with the tax windfall over the past 5 years.
GMB is now considering alongside the other unions the next steps with the possibility of moving to an industrial action ballot.”
2 Copy of previous GMB press release dated 19th October 2015.
GMB NATIONAL WATER FORUM TO DISCUSS PROSPECT OF SECOND DISPUTE AS UNITED UTILITIES PROPOSE CLOSURE OF DEFINED BENEFIT PENSION SCHEME
NAO report of £1,250m windfall proves that water companies can't cry poverty as they seek to shift more costs and efficiencies onto the workforce says GMB
GMB National Water Forum, covering nearly 10,000 members in the water industry, on Monday 19th and Tuesday 20th October in Sheffield will consider proposals on the closure of the United Utilities Defined Benefit Pension Scheme for active members as of 31 March 2016. The scheme was closed to new entrants in 2006.
There will be GMB United Utilities Representatives meeting on Thursday 22nd October followed by meeting of the joint unions in United Utilities on Friday 30th October to agree a joint union response to these proposals.
GMB members at United Utilities provide water and sewage services to around seven million people in North West England. These members look after the water and wastewater infrastructure across the North West covering:
Over 42,000 kilometres of water pipes, from Cumbria to Cheshire.
Over 76,000 kilometres of sewers.
569 wastewater treatment works.
94 water treatment works.
Over 56,000 hectares of catchment land.
Last week GMB and Unite issued notice to Northumbrian Water that members will commence indefinite industrial action short of a strike from 4.30pm on Tuesday 20th October in a separate dispute over pensions. See notes to editor for copy of previous press release on the dispute.
Eddie Parker, GMB regional officer, said “GMB met with senior representatives of the company on 16th October in order to commence consultation on pensions. The company proposes to move active Defined Benefit member’s to the existing UU Defined Contribution Pension Scheme on 1st April 2016. The accrued pension value as of 31st March 2016 will be protected in line with the relevant scheme rules.
The company have made the union aware that they intend to communicate to all impacted employees immediately and then begin a formal 60 day consultation beginning on 16th November.
The union have conveyed their extreme disgust, dissatisfaction and concerns with these proposals.
The discussion at the GMB National Water Forum on a response to these UU pensions proposals means that it is very likely that the prospect for industrial action will move a step closer.
Eamon O Hearn, lead officer for the Water Industry, added “Last week the NAO reported that water companies gained £840m from lower-than-forecast rates of interest and £410m from reduced corporation tax rates.
The NAO report proves that water companies can't cry poverty as they seek to shift more costs and efficiencies onto the workforce.
GMB members have played a key role in delivering significant improvements in service and delivery standards, despite continued reductions in front line staff since privatisation.
The warning that there is little scope for further efficiency gains left in the industry will come as cold comfort to GMB members in Northumbrian Water or in United Utilities, and in the wider industry, who have seen their pensions attacked in order to drain profits out of the UK and into the hands of opaque holding companies.
GMB welcomes the NAO call for greater transparency over the financial and corporate structures of water companies which echoes previous GMB campaigns against private equity barons.
Their raids on pensions and reductions in workforce numbers have drained profits out of the UK and even the NAO are saying there is little left to cut."