Union Unite has threatened with strike action at several sites of luxury carmaker Aston Martin over the proposed closure of its career average pension scheme, having garnered support from affected workers for a strike ballot next year. The consultation period is due to end on 17 December. 

 

The union says Aston Martin Lagonda is planning to close the current CARE scheme at the end of January next year, claiming this would cost some members about £100,000 over the course of their retirement. The company is proposing to move DB members to the existing DC scheme, which already covers the majority of the workforce and new employees. 

 

Several automakers have changed their pension funds first from final salary to CARE, and then to DC in recent years. In 2018, Nissan proposed a CARE switch before closing this and moving to DC in 2020. Volkswagen subsidiary Bentley proposed to move from CARE to DC in 2018, and BMW - which some unions blame for starting a trend - moved to a DC scheme in 2017 after a long-running dispute, with workers eventually accepting cash payments of up to £25,000 as compensation. 

 

 

Unite has conducted a consultative ballot of employees at affected sites in Warwickshire, Milton Keynes, Newport Pagnell and South Wales, which indicates they would support a full-scale industrial action ballot in the new year. Unite said it will fight against any efforts to diminish workers' living standards. 

 

"These workers have done as asked and saved for their retirement, but they have also worked hard to deliver improved profits for Aston Martin.  There is, therefore, no case to be made for closing the defined benefit pension schemes, a move that robs our members of tens of thousands of pounds – in the case of Aston Martin workers, that is about £100,000,” said general secretary Sharon Graham. 

 

“Aston Martin's whole workforce is now aware of the gross inadequacy of the existing defined contribution scheme by comparison – and this will be a significant factor when we put forward our claim in the 2022 pay review,” she added. 

 

The maximum level of employer pension contribution - regardless of seniority – is set at 12% of salary according to the firm’s 2020 annual report. 

 

An Aston Martin spokesperson said: “As a responsible employer, Aston Martin has a duty to deliver financially sustainable pension arrangements for its circa 2,000 employees, whilst managing its pension risks and underlying costs. Having completed a detailed review of its future pension arrangements, and in line with many other UK employers, it is proposing changes to its defined benefit scheme affecting circa 400 employees.” 

 

The spokesperson added: “Should these changes occur, Aston Martin has outlined an attractive transition arrangement – including a one-off cash payment and equity in the company. This is in addition to supporting the defined benefit pension scheme to meet the cost of pension benefits already earned.” 

 

The DB scheme has been in place as a CARE scheme since the beginning of 2018, when Aston Martin changed it from final salary to CARE, having closed the scheme to new joiners in 2011. The DB scheme had £314.6m in assets according to a valuation carried out in early April 2020, shortly after the pandemic-induced market crash, giving a funding level of 76%. The £97m deficit, up from £49m, led the employer to increase its recovery plan contributions from £7.1m to £15m a year from January 2021 to June 2027. During 2020, the scheme also changed its investments, selling all of its property holdings and reducing equities, while ramping up LDI and cash. 

 

The carmaker said that from 1 January 2022, contributions will increase from 23.7% to 37.5% for the Group where the active member does not participate in the salary sacrifice scheme, while for active members in the salary sacrifice scheme, employees make no contributions and from 1 January 2022 the Group contribution is increasing from 30.2% and 34.7% to 44.0% and 48.5% for members who opted for benefits of 1/80th and 1/70th of pensionable salary, respectively.