Capita to Strike over Attempt to Close Pension

Union says changes could cost some workers 70% of their retirement funds.

Workers at UK-based Capita, a provider of business process management services, have voted to strike in response to the company’s proposal to close the current defined benefit plan, and transfer participants to a defined contribution plan.

The union Unite conducted an industrial action ballot following the proposal to close the current defined benefit plan, and the workers will begin six consecutive days of strike action starting Oct. 5. In June, Capita informed its employees of significant changes to its pension arrangements, which Unite says will cause the plan’s participants to “suffer a massive cut in their retirement income.”

“The disgraceful plans by Capita to slash the deferred pay that staff will get in retirement is utterly unacceptable,” said Dominic Hook, Unite national officer, in a statement. “Capita’s pension proposals will have far-reaching consequences for the retirement of many Unite members. Some staff will lose a shocking 70% of their retirement income.”

However, a Capita spokesman defended the company’s decision to move its workers from a defined benefit pension into a defined contribution plan.

“We are disappointed that these employees, some 550, are to support Unite’s strike action,” said the spokesman. “We are in the minority of companies still offering a defined benefit pension plan to a small number, some 4% of our workforce, of our 73,000 employees.”

He added that, “their accrued benefits in the existing defined benefit pension are protected and the new defined contribution offer is above the average terms offered by both our competitors and FTSE 100 companies in the UK.”

But according to Unite, under the proposed pension changes, a 60-year-old worker who makes £25,000 a year, and pays 3% into the plan would see their pension go from earning approximately £2,000 a year for the final five years of service to only £350 a year. This translates to a loss of around £1,650 per year, and a total loss of about £33,000 over a 20-year retirement.

Meanwhile, a 35-year-old employee paying 7% into the plan would see their projected pension halved from £22,000 per year to £11,000 upon being moved into the new proposed plan and paying 6% until retirement, said Unite.

“The extremely high vote in favor of strike action shows how strongly members feel about this,” said Hook. “Capita must urgently rethink these pensions proposals in order to prevent industrial action.” 

Capita said it has plans in place to ensure that “any potential disruption to our clients’ services is mitigated.”

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