Defined Benefit  

Regulators warn Aston Martin workers as DB scheme set to close

Regulators warn Aston Martin workers as DB scheme set to close

Members of the Aston Martin defined benefit scheme have been warned against transferring out and making rash decisions amid the firm's efforts to close the scheme.

The Financial Conduct Authority, the Pensions Regulator and Money Helper have sent a joint letter to the trustees and members of the Aston Martin pension scheme following news that the DB scheme could be shut in January 2022.

FTAdviserunderstands this letter is issued by the regulators where a potential risk is identified in relation to actual or potential cash equivalent transfer value requests.

The letter, seen byFTAdviser, tells members considering a transfer to be careful and to not “do anything in haste”.

It also warns members about approaches encouraging them to transfer.

The letter states: “If anyone approaches you directly to offer transfer advice, be on your guard. The government has banned cold calling for pensions, so if anyone calls you out of the blue about yours, just hang up – it could be a scam.”

It goes on to explain that advice is needed on pots above £30,000 and that it is important to get guidance or advice before making a decision.

A spokesperson for The Pensions Regulator said: “Closure of a pension scheme is a matter for its sponsoring employer, trustee and membership.

“Our joint letter with the FCA and MoneyHelper about CETV requests has been sent to the trustee and is being issued to all members requesting a transfer to make them aware of the risks.

“We believe transferring out of a DB pension scheme is unlikely to be in the best interests of most consumers. Any scheme members looking for impartial guidance, or thinking of transferring out, should contact MoneyHelper on 0800 011 3797 before taking any further action.”

Strike action

Workers at the carmaker have threatened industrial action over the scheme closure.

Unite, the union, said workers “voted overwhelmingly in a consultative ballot” for full-scale industrial action in the new year, in order to protect their retirement incomes.

Some 400 members of the Aston Martin Lagonda Limited Pension Scheme are set to be affected by the proposed change. The company has approximately 2,000 employees in total.

Workers face losing about £100,000 in retirement income, based on a career-averaged salary, if the DB scheme is closed from February next year, Unite argued.

The company wants to move the DB members to the existing defined contribution scheme, which currently covers the majority of the workforce and also new employees.

However, Unite argues that such DC schemes are at “the mercy of sudden fluctuations in global stock markets and produce worse retirement incomes”.

Unite general secretary Sharon Graham said: “We will back our members at Aston Martin 100 per cent if they decide to take industrial action to defend their pensions and defeat this threat to their retirement incomes.  

"Aston Martin’s whole workforce is now aware of the gross inadequacy of the existing DC scheme by comparison, and this will be a significant factor when we put forward our claim in the 2022 pay review."