Ford may face legal fight over pensions promises

Jul 26 2010 by John Hill, The Journal

UNION bosses have warned motor giant Ford that it could face legal action after providing "misleading" advice to workers over pension rights.

Unite is backing employees who say they were told by Ford that their accrued pension rights would be safe if they switched to subsidiary Visteon in 2000. However, up to 4,000 have since been told they could lose nearly half of their entitlements after the company went into administration last year.

The union’s national officer Roger Maddison said the argument was a “fight for pension justice” and pledged to push on with legal action if no resolution is achieved.

He said: “Hundreds of workers were sacked at a minute’s notice and lost their pensions. We believe Ford misled many of them, leading them to believe their pensions were safe with Visteon.

“Ford failed to clearly set out the risks associated with transferring the assets staff had built up with Ford – now many of these workers face vastly reduced pensions. The workers’ fight for justice won the moral argument and succeeded in getting vastly improved redundancy terms. Now the fight for pensions justice begins.”

Visteon was formed in 1997 and spun off from Ford three years later. In 2004, it boasted 70,000 employees worldwide and was one of the world’s leading suppliers of automotive parts.

However, its subsidiary Visteon UK went into administration in March, sparking protests by closing three factories with the loss of 600 jobs. Workers at the closed Belfast plant staged a seven-week sit-in which ended when bosses offered an improved pay-off.

Visteon filed for Chapter 11 bankruptcy in the US in May, saying its capital structure was “not sustainable given the current economic environment”.

In the UK, workers are dismayed that their pensions are set to be reduced in line with the rules of the Pension Protection Fund, a scheme launched in 2005 as a contingency for workers whose companies become insolvent.

While staff over 65 at the time of the collapse will be given a full pension, those under 65 will lose 10% and there are further losses for early retirees and higher earners. Former workers from Basildon, Enfield and Belfast have been campaigning to force Ford to take back its pension obligations.

Ford has stated that it will resist any attempt to legally challenge its position, saying that it met its obligations when Visteon gained full independence in 2000.