POTASH HIT BY PENSIONS ROW

Jun 20 2008 by Paul Gannon, Evening Gazette

A FURIOUS row has broken out over pension rights at Loftus mining firm Cleveland Potash.

Angry union representatives say the company has tabled “unfavourable” changes to its existing scheme after it backed down on plans to end its final salary pension plan.

A meeting is due to take place on Monday when both sides hope to thrash out the finer details of a revised scheme.

It is believed the row centres around plans to increase employee pension contributions from 5% to 7.5% and the age at which employees are eligible to receive full pension benefits from 60 to 65.

Workers are angry at the prospect of shouldering additional costs at a time when they are already being hit with rising energy and food prices.

A trade union representative said: “Workers are upset that they could be worse off when the company is making good profits from high demand for potash in India and China.

“My guess is that there will be a different offer on the table in Monday’s meeting.”

“The retirement age seems to be the main point of contention.

“Perhaps they might go back to the original age of 60.”

A spokesperson for Cleveland Potash denied that the terms of the new deal were unfavourable.

He said there was “no truth whatsoever” in the suggestion that Cleveland Potash had proposed - or wished to - end its defined benefits pension scheme.

“What we have done is put forward proposals which would enable the maintenance of the scheme in the future and protect the interests of both the company and employees.”

In recent years many companies have closed their final salary schemes to new employees to ensure they don’t have to pay out huge sums of money if investments don’t realise sufficient funds.

However, company finances are still being hit by soaring fuel and raw material costs.

Yesterday, the Governor of the Bank of England, Mervyn King, warned that the days of double-digit pay rises were over as the UK faces its “most difficult economic challenge for two decades.”

Zanna Bewick, who runs Newton Aycliffe-based HR consultancy firm Elphaba Business Solutions, believes more companies will look to save money in ways other than tinkering with their pensions.

She said: “Most companies stopped their final salary schemes some years ago.

“In the current climate, we are seeing a trend of one-off redundancies and non-replacement of staff.

“Companies are also doing more positive things, such as introducing flexible working practices to increase the productivity of their workforce.”

On a positive note, she added that local firms were choosing not to cut back on training costs for fear of undermining the skills base of their business and jeopardising future growth.