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Honeywell has made plans to close its UK defined benefit pension scheme, which has put the US industrial giant on a potential collision course with Britain’s biggest trade union.
The proposed closure, which will affect 1,300 employees, comes a year after the Fortune 100 company’s £3.3bn purchase of Melrose Industries’ Elster meter business, which included the transfer of three pension schemes with combined deficits of £134m.
Honeywell said the move to shut the final salary pension scheme had nothing to do with the acquisition of Elster’s pension plans, and was not part of wider cost-cutting measures.
“This proposed change is in line with UK market trends, with approximately half of FTSE 100 companies either having no defined benefit scheme or freezing their DB schemes to future accruals,” Honeywell said in a statement.
A spokesperson added: “I want to stress this is only a proposal at this stage. A final decision on how to proceed will be made in November.”
Honeywell has invited members of the final salary pension plan to join its defined contribution scheme, which invests employer and employee contributions in the stock market. Honeywell, which posted a profit of $1.26bn in April, said 75 per cent of its UK employees are enrolled in the defined contribution scheme.
Linda McCulloch, national officer for Unite, Britain’s biggest trade union, said: “Unite members are very disappointed that Honeywell, a very profitable company, has seen fit to propose closure of its defined benefit scheme and to offer members a poor-quality defined contribution scheme, given that such plans rely on the vagaries of the stock market. The management is not offering any compensation for this proposed change.”
“We recognise that current market conditions are creating big problems for defined benefit pension schemes, but our members do not accept that closure of these schemes is inevitable.”
Pensions consultant John Ralfe said the planned closure was not a surprise. “Many larger DB schemes and virtually all small and medium-sized enterprises’ schemes are now closed. Everyone is doing it.”
Unite will meet union representatives at Honeywell about the proposed closure on October 7.
Mrs McCulloch said: “The proposals affect 1,300 employees. Unfortunately, the American-owned company has, so far, firmly resisted national consultation on the pensions issue. If members do not accept that the employer has made a reasonable case for any pension changes then the union will give them its full support in resisting those changes.”