Defined Benefit  

Union to reject British Gas pension proposal

Union to reject British Gas pension proposal

A pension proposal from British Gas owner Centrica has been dismissed by the union representing its workers over concerns it would require members to work longer hours and pay more for less.

Workers union Unison, which represents about 2,000 British Gas workers, is urging Centrica to come back to the negotiation table to discuss possible alternatives before a vote takes place next year.

The company is currently consulting on proposals for its 11,000 defined benefit (DB) scheme members, which is expected to conclude with a ballot in January.

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According to Unison, Centrica is proposing to link retirement to individual workers’ state pension age, which would be 67 for many. Centrica said the link to state pension age would not apply to the 7,000 engineers the company employs.

Centrica also proposed a 3 per cent increase in members’ contributions – following a 3 per cent increase three years ago – while an alternative ‘low-cost option’ would see a further 1.5 per cent increase.

Reducing the default accrual rate for members’ benefits from 1/60th of pensionable salary for each year paying into the scheme to 1/80th was also suggested.

Matthew Lay, Unison’s national officer, said these proposals "add up to an unacceptable deal for British Gas staff and penalises the poorest paid in the business, which is plain wrong".

He said: "Staff are being asked to work longer, pay more, get less. It doesn’t give staff much hope for the future."

He pointed out with the second big increase in members’ contributions in three years, workers would be paying 12 per cent for a 1/80th benefit.

The low cost option would see members pay 7.5 per cent for 133rd of pensionable salary each year – which he described as a "really poor" deal.

While the company is offering compensation, this is 50 per cent lower for low-paid staff members. Unison is suggesting a common percentage of salary for all staff.

"For the avoidance of any doubt," Mr Lay said, "we welcome the continued commitment to look to provide a form of DB pension scheme for our members."

But he added: "The fact remains this needs to provide a good quality pension benefit at an affordable cost. These proposals, put simply, do not do that."

Centrica said the proposals were part of a wider efficiencies programme announced in February and were needed to reduce costs due to increased competition and the price energy cap, alongside an increase in pension costs and risks.

A Centrica spokesperson said: "We want a long term attractive pensions deal that is good for our customers and colleagues.

"The energy market is increasingly competitive and we are taking action across our whole business to respond to this; we are now consulting with trade unions and colleagues about proposals to reduce our pension costs to a level which allows us to be price competitive for our customers, while still providing the defined benefit pension option which we know is very important to our people."