The UK’s lights could go out after thousands of National Grid workers were told they may have to treble their pension contributions to tackle a funding shortfall.
The extra cash, say company bosses, would ensure they have a decent retirement and help to pay for those former workers currently in retirement.
The growing crisis of the country’s pension funding shortfall has been highlighted after news that the National Grid, which runs the largest gas and electricity networks, has begun informal talks with the GMB union.
They are warning that 5,500 workers could see the terms of their generous final-salary pension scheme changed.
The reason is that the fund is now in deficit to the tune of more than £1 billion.
Growing National Grid deficit
The deficit is set to grow after a review of the pension funds for electricity and gas companies is completed.
A massive potential problem is sparked by the industries having fewer workers paying into the pension schemes which, in turn, support more than 75,000 pensioners who draw National Grid pensions and those of 35,000 members who moved from the firm before retirement.
The announcement from National Grid has angered union leaders who are threatening industrial action in a bid to stifle the planned changes to pension arrangements.
The union says it believes National Grid bosses are planning to treble contributions and they have written to members warning them not to agree to ‘detrimental changes’.
In addition, they warn, there are changes being planned by the coalition government which could drastically affect similar schemes.
Plans to plug the gap
Gary Smith, of the GMB, said: “For National Grid to suggest employees can afford for their contributions to treble is ludicrous. We cannot agree to something that will affect our members in this way.”
Mr Smith says that the company’s investors should also share ‘any pain’ after the firm announced that shareholder dividends will grow with inflation with a last interim payment being increased by 4% on the last year.
A spokesman for National Grid said that the initial meeting was not the beginning of negotiations but more of a briefing on the potential difficulties that the firm’s pension scheme is facing.
He highlighted that many big firms which were nationalised not only had bigger workforces to pay for pensions but the benefits were usually very generous.
He said: “As a company we have to review the scheme’s costs and ensure it is sustainable and affordable in the future but it’s very early in the process to give details of any discussions and of any potential agreement for our employees on a way forward.”
