UK
Aston Martin faces strike action over DB scheme closure
Workers at carmaker Aston Martin have threatened industrial action following news that it plans to close its defined benefit pension scheme in January 2022.
Unite the union said that 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.
Staff at sites in Gaydon and Wellesbourne, both in Warwickshire, as well as Milton Keynes, Newport Pagnell, and St Athan in South Wales took part in the consultative ballot.
These workers have done as asked and saved for their retirement, but they have also worked hard to deliver improved profits for Aston Martin. There is, therefore, no case to be made for closing the DB pension schemes, a move that robs our members of tens of thousands of pounds – in the case of Aston Martin workers, that is about £100,000
Workers face losing about £100,000 in retirement income if the DB scheme, based on a career-averaged salary, 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”.
Changing gears
Plans to close the company’s DB scheme come four years after it transitioned away from a final salary model.
In 2017, its structure was changed to a career average revalued earnings scheme. The scheme was closed to new entrants on May 31 2011.
According to the pension fund’s 2020 actuarial valuation, the value of its assets stood at £314.6m, sufficient to cover 76 per cent of the benefits that had accrued to members.
It had been planned that from January 2022, contributions would increase from 23.7 per cent to 37.5 per cent for active members who do not participate in the salary sacrifice scheme. Those who do participate make no contributions.
From January 1 2022, the group contribution would increase from 30.2 per cent and 34.7 per cent to 44 per cent and 48.5 per cent for members who opted for benefits of 1/80th’s and 1/70th’s of pensionable salary, respectively.
With the scheme deficit standing at £97m, the group agreed in December 2020 to increase the recovery plan contributions from £7.1m to £15m a year, effective from 2021 to 2027.
Estimated contributions for the year ending December 31 2021 were £20.6m, the group’s 2020 annual report stated.
Aston Martin backs DB closure
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.
“These workers have done as asked and saved for their retirement, but they have also worked hard to deliver improved profits for Aston Martin. There is, therefore, no case to be made for closing the DB pension schemes, a move that robs our members of tens of thousands of pounds — in the case of Aston Martin workers, that is about £100,000.
“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,” she added.
A spokesperson for Aston Martin told Pensions Expert: “As a responsible employer, Aston Martin has a duty to deliver financially sustainable pension arrangements for its circa 2,000 employees, while managing its pension risks and underlying costs.
“Having completed a detailed review of its future pension arrangements, and in line with many other UK employers, it is proposing changes to its DB scheme affecting circa 400 employees.
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“Should these changes occur, Aston Martin has outlined an attractive transition arrangement, including a one-off cash payment and equity in the company. This is in addition to supporting the DB pension scheme to meet the cost of pension benefits already earned,” the spokesperson continued.
“Aston Martin remains in direct communication with the affected employees, and their representatives, regarding these changes and is unable to comment further at this time.”
The consultation period with members is due to end on December 17, although Unite has called for it to be extended.
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