Unison hits back at Thames Water for leaking pension talks; claims scheme is sustainable

The public service union, Unison, has said it is “disturbing” that Thames Water has revealed it is in talks with unions over the future of its defined benefit pension schemes, which Unison claims were “strictly confidential”.

Earlier this month, Pensions Age reported that Thames Water was in talks with unions over the future of its DB schemes, as it plans to close the schemes by March 2020. The water supplier claimed that the schemes are “unsustainable”.

Thames Water currently has a plan to cut its pension deficit to zero by 2027, with it currently paying £22m a year in contributions. In its most recent annual report, for 2017/18, it revealed its DB schemes as at 31 March 2016 had a combined deficit of £364.9m (actuarial valuation), compared to £288.3m in 2013. However, under IAS 19, its more recent deficit was £300.8m at 31 March 2018.

Unison national officer for water, environment and transport, Andrew Dobbie, has told Pensions Age that “its pension schemes are not unsustainable for the company”.

“The firm has had average operating profits of more than £600m a year over the past five years, but its pension contributions for its defined benefit schemes were less than one fiftieth of this figure last year. Whether it closes the schemes or not it will be liable for payments to repair the deficit, as your readers will be aware,” he stated.

He also said that the talks between the unions and Thames Water were meant to be confidential.

“It is disturbing that Thames Water would comment publicly on discussions with unions on future pension provision. We were told by the company that these talks were strictly confidential and while we respected this, the company did not.”

Dobbie has accused executives at the company of wanting to save on the cost of providing existing pensions.

“Slashing terms and conditions and breaking existing pension promises will only impact on the company’s ability to improve its performance after failing miserably in recent times and incurring huge fines for both pollutions and leakage,” he said.

In the letter to Pensions Age, the union noted that Thames Water “will continue to be a monopoly seller of a product with a guaranteed price that everyone needs”, which only a few companies across the economy enjoy.

“It would be a bitter irony for a company largely owned by DB pension schemes to further pad out its profits by closing its own DB schemes. This would betray promises it made to workers when they joined the firm. We will continue to engage in discussion with the company to maintain the schemes, which any reasonable person would understand are wholly sustainable,” he said.

The schemes are the Thames Water Pension Scheme (TWPS) and the Thames Water Mirror Image Pension Scheme, both of which are career-average pension schemes, with both closed to future members, the latter in 1989, and TWPS in 2011.

Around 4283 (67 per cent of the workforce) are in a DC scheme through which the company pays twice the employee’s contributions up to a maximum of 12 per cent of salary.

Thames Water told Pensions Age that the information that they previously provided, which was referenced in this article, is all they wish to say on the matter.

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