Tobacco workers at Gallaher’s are “furious” over its parent company’s plans to close its final salary defined benefit scheme to future accrual.

According to union Unite, Japan Tobacco International (JTI) plans to close the UK scheme on 31 December 2017 and move workers into a defined contribution scheme. However, Unite has accused JTI of “blatant opportunism” over the scheme’s closure, which follows the relocation of its manufacturing operation in Northern Ireland to Poland with the loss of 800 jobs.

The union said that there was still a 700-strong workforce in the UK of which 177 were in the final pension scheme. Unite has members at the company’s UK headquarters in Weybridge, Surrey and at the distribution centre in Crewe. Unite is due to meet UK bosses at Weybridge on 12 October and will be asking for a boost to the pensions of the employees, as it said JTI had profits of £4bn in 2016 and paid out £1.6bn to shareholders.

Unite regional officer Phil Silkstone said: “Our members are rightly furious. Yet again, we have ordinary hardworking people losing out on their security in retirement at the expense of fat cat bosses and massive shareholder pay-outs. Our members are set to lose thousands of pounds in retirement income once they are transferred to the new DC scheme on the 31 December 2017, with a top contribution rate of 16 per cent from the employer, instead of the 46 per cent with the final salary scheme.

“At our meeting on 12 October, we will be asking for more funds to be directed into the workforce’s pensions, given the high profitability of JTI. We think that is only fair. Last year, its profits rose substantially, so any pleas of poverty simply don’t ring true. Yet again UK workers are given a raw deal with a substantial difference between what was offered to Dutch workers when changes were made to their pension schemes and what the UK workers are being offered.”

Unite is frustrated with the company’s executives at both the JTI headquarters in Switzerland and, ultimately, the executives at the head office in Japan over the company’s steadfast refusal to consider keeping the DB scheme open or offering adequate compensation for the serious financial uncertainty now being forced to accept the DC pension scheme.

Gallaher’s, founded in Ireland in 1857, used to manufacture classic UK brands in Northern Ireland, such as Benson & Hedges, Silk Cut, Old Holborn, Senior Service and Hamlet Cigars. JTI purchased former Gallaher Tobacco UK Ltd for £9.6bn in 2007.

A spokesperson for JTI said: "JTI can confirm that Gallaher Limited is, regrettably, proposing to close its defined benefit pension schemes to future accrual as of 31st December 2017. The Company has entered into a period of consultation with trade union and other employee representatives about the proposals, which remain subject to such consultation.

"The Company does not intend to make any further comment on this matter whilst the consultation process is ongoing."

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