Workers at Rolls-Royce were celebrating a victory yesterday in saving their pension benefits after a dramatic reversal by the company.
Employees were on the verge of striking over proposals to cut the rate at which their pensions accumulate. The change, based on the length of service with the company, would not only have reduced benefits accumulating in the future, but would have taken a slice off the value of previous years worked at Rolls-Royce.
But the company reached a last-minute compromise yesterday with unions that will safeguard the value of pension pots already built up.
Rolls-Royce also gave employees a commitment to increase the contribution it will make to the pension fund, which has a £1.1bn deficit. It will now put in an additional £35m a year, making its contribution £95m a year. It had originally planned to pay an increased contribution of £30m for five years, but will now pay the increased levy indefinitely.
Rolls-Royce did not entirely cave in, however, and unions have had to accept its proposals to reduce the rate at which pension funds grow as a proportion of service going forward. This means pension benefits will be lower from now on, but Rolls-Royce pledged yesterday to increase benefit levels if it lowers its contributions and the financial situation of the fund improves.
Amicus, which represents 18,000 Rolls-Royce staff, has been negotiating with the company on its pension proposals since February and was on the brink of balloting members for strike action over its proposals. But crisis talks with the company last Thursday led to the first signs of breakthrough. Amicus now plans to ballot staff recommending that they accept Rolls-Royce's new plans.
Steve Wright, of Amicus, said yesterday: "Rolls-Royce has come back to the table with a much-improved deal that achieves no reduction in the value of past service, a commitment to long-term funding and a fairer balance between increased company contributions and reductions in member benefits. We believe this is the best offer that can be achieved through negotiation."
A spokesman for Rolls-Royce said the company was delighted to have settled on proposals that addressed the deficit in the pension fund and were fair to all staff.
Employees were on the verge of striking over proposals to cut the rate at which their pensions accumulate. The change, based on the length of service with the company, would not only have reduced benefits accumulating in the future, but would have taken a slice off the value of previous years worked at Rolls-Royce.
But the company reached a last-minute compromise yesterday with unions that will safeguard the value of pension pots already built up.
Rolls-Royce also gave employees a commitment to increase the contribution it will make to the pension fund, which has a £1.1bn deficit. It will now put in an additional £35m a year, making its contribution £95m a year. It had originally planned to pay an increased contribution of £30m for five years, but will now pay the increased levy indefinitely.
Rolls-Royce did not entirely cave in, however, and unions have had to accept its proposals to reduce the rate at which pension funds grow as a proportion of service going forward. This means pension benefits will be lower from now on, but Rolls-Royce pledged yesterday to increase benefit levels if it lowers its contributions and the financial situation of the fund improves.
Amicus, which represents 18,000 Rolls-Royce staff, has been negotiating with the company on its pension proposals since February and was on the brink of balloting members for strike action over its proposals. But crisis talks with the company last Thursday led to the first signs of breakthrough. Amicus now plans to ballot staff recommending that they accept Rolls-Royce's new plans.
Steve Wright, of Amicus, said yesterday: "Rolls-Royce has come back to the table with a much-improved deal that achieves no reduction in the value of past service, a commitment to long-term funding and a fairer balance between increased company contributions and reductions in member benefits. We believe this is the best offer that can be achieved through negotiation."
A spokesman for Rolls-Royce said the company was delighted to have settled on proposals that addressed the deficit in the pension fund and were fair to all staff.
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