Defined BenefitMar 1 2019

Engineering firm faces strike action over pension scheme

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Engineering firm faces strike action over pension scheme

More than 400 employees at Delphi Technologies could go on strike over the closure of the company's final salary scheme.

Unite Union confirmed today (28 February) that it is balloting members at Delphi Technologies’ two sites in Gillingham, as well as in Stonehouse and Warwick for strike and industrial action. 

According to Unite, the company plans to close its defined pension scheme by March 28, 2019 and will replace it with a defined contribution scheme. 

The ballot opens on March 7 and will run for two weeks, closing on March 21. 

The union's pension consultants have run scenarios based on different levels of service, ages, male and female recipients and found some people could be losing out on tens of thousands of pounds from no longer being able to save into their gold plated scheme.

Des Quinn, Unite’s national officer for the automotive sector, said: "The ballot is being held because workers at the company’s four locations stand to lose tens of thousands of pounds from their pension pots, if this proposal is allowed to go ahead.

"Unite believes that this is totally unacceptable and an insult to a dedicated workforce – and we call on the management to halt the move to a defined contribution scheme, otherwise the possibility of strike action remains a very real possibility."

Delphi Technologies had a reported revenue of $4.9bn (£3.7bn) in 2018, according to its financial statement, and in January 2019 appointed Richard Dauch as its CEO. 

According to Delphi Technologies’ 2017 published annual report, the latest available, the firm’s pension scheme was underfunded by $480m (£361.9m). 

Unite has claimed that the management of the vehicle propulsion firm "failed to offer acceptable changes" to the schemes or to compensate those that are set to miss out.

Mr Quinn said: "Despite the huge amounts of money members stand to lose, every effort was made by Unite to reach an agreement. 

"They also failed to provide the necessary minimal compensation for those closest to retirement who now have little time to financially plan for their retirement under the proposed new detrimental pension regime."

Steve Webb, director of policy at Royal London, said: "Traditional final salary pensions have many advantages, providing a guaranteed level of pension as well as protection against inflation during retirement.

"But since the introduction of pension freedoms, defined contribution pensions have become more popular because of the flexibility that they give people about how and when to take their retirement income.  

"The real issue is that when firms close their final salary pension they are often also planning to cut the amount they put into workers’ pensions overall. Whatever model of pension provision is chosen, if employers put less money in then workers are likely to get less pension out."

It is unclear how much Delphi Technologies intends to contribute to the new scheme.

Delphi Technologies has not responded to requests for comment.