Pensions hypocrisy of Labour-backing union as Unite bosses eye plan to axe final salary scheme

Labour’s biggest union backer was accused of hypocrisy last night for proposing to scrap its staff final salary pension scheme.

The move by the Unite trade union, which represents more than 1.4million workers, comes despite it previously taking action against companies that have proposed similar steps.

The change has been prompted by the need to tackle the deficit in the union’s pension scheme.

A senior union source said: ‘[Unite secretary general] Sharon Graham (pictured) needs to be open with the members about the mess she’s inherited from Len McCluskey’

A letter to scheme members outlined the decision to move them ‘from a final salary to a career average revalued earnings (Care) benefit structure’.

It said the move ‘reduces the risk of funding deficits’ as it is easier to predict – and claimed it ‘does not necessarily provide lower benefits than a final salary scheme’.

A final salary scheme pays out an income based on the wage at the time of retiring, while a Care scheme calculates the salary average across a worker’s career.

But a document on Unite’s website suggests switching to a Care scheme ‘will be calculated as reducing the cost of pension’ for employers.

One example suggests a worker on a £22,950 salary could receive £440 a year less in their pension in a Care scheme than in a final salary one.

Unite has also proposed raising the ‘normal retirement age’ for its scheme from 63 to 65 and increasing the average contribution rate from employees.

There have been several occasions in recent years where Unite moved against companies proposing to scrap their own final salary pension schemes.

A document on Unite’s website suggests switching to a Care scheme ‘will be calculated as reducing the cost of pension’ for employers (stock photo used)

In December, union members at Aston Martin voted for strike action. A few months earlier, hundreds of members at the Stanlow oil refinery voted for similar steps over the ‘proposed closure of the pension scheme’.

Action was also taken in June against General Electric, as well as at Delphi Technologies and Glasgow and Aberdeen airports in 2019.

A senior union source said: ‘This does seem hypocritical when the union is fighting employers who are seeking to change members’ pension rights, yet seems prepared to do the same for its own employees.

‘[Unite secretary general] Sharon Graham needs to be open with the members about the mess she’s inherited from Len McCluskey.’

Among the inherited problems is a £98million hotel complex built by her predecessor Mr McCluskey.

Miss Graham, who was elected last August, announced an inquiry into the project – now valued at less than the cost to build.

A Unite spokesman said Miss Graham was ‘keen to deal with the long-standing pension deficit which she inherited’.