A US automotive components supplier which is one of the largest employers in the West Midlands is threatening to remove its final salary pension scheme for its UK workers.
TRW Ltd – a subsidiary of the US based TRW Automotive – said there is a £500m deficit in its pension pot for its 2,700 UK workers and said stricken share prices, meaning a reduced return on investments made out of the fund, along with increased life expectancy, is to blame.
The scheme will now be closed to new entrants and existing workers.
TRW’s UK HR director, Graham Plumley, said: “This is an extraordinary step following the unprecedented global financial crisis. It is the duty of the Trustee Board and the Company to take all appropriate actions to safeguard the benefits that have already been accrued by both our current and former employees.”
TRW took over the automotive division of Lucas Industries in 1999 and its pension scheme inherited that of Lucas. The TRW scheme is thus over 50,000 members strong.
Some TRW workers are now thought to be set to receive only half what they expected to get in their retirement package.
TRW Pension Scheme trustee board secretary, Roy Middleton said: “The advice we received from both our actuarial and legal advisers is that the Trustee needs to take immediate action to protect the accrued benefits of our Scheme members.
“In simple terms, our proposal is to close the scheme to future benefit accruals in order to focus on ensuring that we can honour commitments related to all contributions received and benefits accrued to date.”
A spokesperson for EEF, the manufacturers’ organisation, said the body expects many more large companies to make similar changes in response to the downturn. “There is a degree of inevitability about this move,” he said. “It is becoming a pattern across the industry.”
TRW has three sites in and around Birmingham at Solihull, Perry Barr and Mere Green.
The consultation period over pensions reform is expected to last until September.
