Chemical firm defends axeing final salary pensions for new employees

The HR director at chemical manufacturer Rhodia has defended his firm’s
decision to close its final salary pension scheme to new members despite fierce
opposition from some workers and their unions.

Employees at two of Rhodia’s 12 UK plants went on strike last week following
the company’s decision to replace its final salary scheme with a money purchase
scheme for new staff.

Bob Tyler told Personnel Today the company had reluctantly decided to wind up
its final salary for new members because of the volatile stock market.

The HR chief said Rhodia will make contributions of about 13 per cent of
salary to the new money purchase scheme, with staff adding up to 7 per cent.

"We have not looked at this in isolation," said Tyler. "What
we are offering in terms of pensions is certainly there or thereabouts compared
with our major competitors."

Tyler said the decision to axe the final salary scheme for new members was
also affected by a significant pension deficit that Rhodia inherited when it
acquired Albright & Wilson in March 2000.

He said Rhodia considered radically restructuring its benefit provision for
all staff, but had settled on the option to close the final salary pension for
new members because this was the only way to avoid reneging on agreements made
with existing employees.

Rhodia started consulting with workforce representatives over the plans last
September and after opposition from unions spent three months looking at
alternative pension options.

However, these were not considered viable and in April the company told
representatives of the Amicus, T&G and GMB unions that it would be going
ahead with its original proposals.

Derek Simpson, Amicus general secretary, criticised Rhodia’s decision.
"The workers at Rhodia are not just fighting for the future of the scheme,
but for the future of their children and their communities," he said.

By Ben Willmott

Comments are closed.