Industrial action looms as CNG abandons final salary pension

Journalists at Cumbrian Newspapers Group are to ballot for industrial action over how much compensation should be paid following the company’s decision to scrap its final salary pension scheme to all members of staff.

An increasing number of companies are taking the step to exclude existing members from FSP schemes rather than just incoming staff members.

Parent company CN Group is to enforce a defined contribution scheme that is dependent on market performance and annuity rates rather than an employee’s length of service, due to a £7.7 million deficit in the company’s pension.

The scheme is understood to have come under pressure because of factors such as increased life expectancy and poor returns on equity.

Members of the scheme have been offered a one-off lump sum of 7 per cent of annual salary as well as a death in service widow’s benefit, which has cost the company half a million pounds, according to CN Group chief executive Robin Burgess.

The new scheme is due come into force on 1 April, and the company imposed a 3 per cent pay rise in January.

Although the chapels, which cover the Carlisle News & Star and Cumberland News were due to strike last year over the matter, it was called off when the company agreed to postpone the move from 1 November 2006 to 1 April to consider proposals.

The new pension scheme is not contracted out of the state pension, which means members will pay a higher rate of National Insurance.

Father of chapel Julian Whittle said: “They are obviously absolutely determined to go ahead with closing the scheme, so the argument’s moved on to how you compensate people.

“The 3 per cent increase imposed in January only amounts to 1.4 per cent when you take the National Insurance off, and even less when you take into account people having to find extra money to put into their pension schemes.

“A lot of people won’t have a pay increase this year. We believe most of our members will be down by around £5,000 a year under the new scheme.”

The union had put several proposals to management including tying compensatory payments to company profits and skewing compensation in favour of those worst affected by the move.

The union believes the worst affected age group is 35- to 55-year-olds, who under the new scheme will only have 10 to 20 years to accrue money before retirement.

Burgess said: “I am concerned and saddened it has got to this stage of having a ballot. We made significant changes to our proposals following the consultation period. We need to ensure we have a successful business going forward.

“Because the new scheme involves the individual deciding how much to put into their pension, you can’t generalise about how people are going to be better or worse off.

“There will be some who could end up with no pay rise but it becomes their choice of what they pay into their pension.

There is increased National Insurance but the substantial benefit for that is the company’s contribution is over 3 per cent.

“In an ideal world we would have liked to have skewed compensation for different people but age discrimination laws that have since been introduced do not allow it.

“Trading is not good at the moment.

We have not had any redundancies and we are keen to maintain the quality and standards of our newspapers. I hope the union will realise what position we are in and pull back from any industrial action.

“We are willing to talk to explain in more detail the changes but I can’t see there is anywhere we can negotiate an increased pay rise.”

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