Unite the Union has warned that Clarion Housing Group’s pension hike risks “pushing workers into poverty”.
Earlier this week, Clarion announced it had written to members of its pension scheme, informing them that from 1st April, employee contributions for some defined-benefit pensions could be set at 22.9% of their salaries.
This rate will apply for workers with 1/60 final-salary pensions – meaning their annual pensions are worth 1/60th of their salary at retirement for each year of service at Clarion.
Employer contributions, however, will remain capped at 7.5% – with around 340 Clarion employees expected to be affected by the change.
According to Unite, an employee earning £30,000 a year would have to contribute an additional £245 a month to stay in the group’s final-salary scheme.
Unite’s regional officer, Matt Freeman, said: “This is a slap in the face to the hundreds of workers who have worked hard and paid into the defined benefit schemes on the promise of a secure income for life.
“With this hike, Clarion is pricing members out of a decent pension and worse – into poverty when they retire.
“Clarion knows full well that a hike of this scale is basically closure by stealth as many members will simply be unable to afford the estimated £3,000 more a year it will take to stay in the scheme.”
He added that while many staff across the organisation face cuts to their pension, Clarion now employs 48 senior managers on £100,000 a year or more – an increase of 14 in a single year.
“It is even more unjust given that the burden is falling squarely on workers’ shoulders with Clarion – an organisation with an earned net surplus of £154m last year – not increasing it contributions by a single penny,” Freeman said.
“Unite will continue to push for an end to the group-wide 7.5% employer contributions cap, which is far from generous for such a financially strong organisation.
“This will enable Clarion’s management to contribute more to their hardworking employees’ final pension pot,” he added.
A spokesperson for Clarion Housing Group said: “We are acutely aware the increase in employee contributions under the CHGPS defined-benefit schemes will represent a significant change.
“We have consulted on this change and provided guidance for members about their choices, including moving to a different defined benefit arrangement within the scheme or joining the open defined-contribution scheme.
“The reason the employer contribution remains unchanged is because it is capped at 7.5%, which is consistent with our open pension arrangement that we offer to all employees.
“The cost of providing a defined-benefit pension is significant, as this carries a guaranteed future income and is something that most companies no longer offer for this reason.”