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UK employees of US multinational GE could go on strike over the company’s plans to close the UK pension schemes to accrual from 2022, union Unite has warned, as GE becomes the latest employer to seek to manage pension costs amid the pandemic.
As the end of the pandemic may be coming into view, some employers are turning their attention to longer-term cost cutting measures such as DB closure, having initially focussed on short-term relief like contribution holidays. Employers in hard hit sectors such as transport and leisure are among those proposing closures; earlier this year, FirstGroup announced it would close the Hull Trains section of the Railways Pension Scheme despite a high funding level, after passenger numbers dropped.
Multi-sector giant GE, with UK pension liabilities of $14bn, announced in January that it would consult on closing the GE Pension Plan and the GEAPS (2006 Section) to accrual from January 2022, a move which would affect about 2,800 employees.
As the consultation period has come to an end, Unite said that a ballot for industrial action this summer was “very much on the cards” in light of the company’s plans. The sites that could be affected include Cardiff, Cheltenham, GE Caledonian (Prestwick) and Rugby, as well as Dowty Propellers in Gloucestershire, while some Unite members are service engineers with a national remit.
In a letter to GE’s UK and Ireland chief executive Kevin O’Neill,Unite national officer Linda McCulloch expressed the union’s dismay at the proposals, saying the company’s handling of the situation was “abysmal” and that management had refused to engage in “a proper negotiation” with Unite.
“It really is no wonder that there is such a degree of anger amongst the workforce and such a low level of morale. This will doubtless display itself in a high level of attrition in the future,” she said.
Unite national officer Rhys McCarthy said that a ballot about strike action was now on the cards. “GE’s reputation is very much at stake as it joins the sorry roll-call of companies which have cynically exploited the pandemic to attack the employment conditions of employees,” he added.
'Aligning with current industry standards’
GE, which saw its share price recover from the pandemic impact late last year but remain far below levels seen before 2018, noted in its Q1 results that GE Industrial’s organic top-line was “still pressured” with a 10% revenue decline.
A GE spokesperson said: “The proposed changes to our UK defined benefit pension offerings are difficult but necessary as we continue to accelerate GE's transformation and solidify our financial position while more closely aligning with current industry standards. We have completed a thorough 60-day consultation with plan members and are considering all questions and feedback.”
The closure, the firm said in January, would help it to “further GE’s objectives of actively managing pension costs and risks”. Employees are set to be moved to a defined contribution scheme, with the company proposing a temporary increase to the default 10% employer contribution by 2% [sic] for the first two years.
The company closed its US pension fund and supplementary pension in 2019 and in December last year, poured $2.5bn into its pension schemes to “pre-fund” obligations. It also bought group annuity contracts from Athene for some of its members at the time.
Is the pandemic a catalyst for DB scheme closures?