By Denna Bowman
Beleaguered workers at a UK Pirelli tyres plant look set to suffer another blow after the company announced plans to close its final salary pension scheme.
The Italian-owned tyres manufacturer confirmed that it will consult the workforce at and unions at its Carlisle factory over plans to shut down its defined benefit scheme from January.
The company said the decision was taken after its pension liabilities grew “dramatically”, partly because workers and ex-workers are living longer, according to the report in the News and Star.
Under the proposals, staff would have their pensions transferred to a defined contribution scheme, which is dependent on stock market performance.
Pirelli said the move is vital to protect its long-term future.
However, the closure is the latest in a year of setbacks for the Dalston Road factory’s workforce.
Shopfloor staff have suffered redundancies, temporary shutdowns and a suspension of their guaranteed working week because of a slump in demand for tyres.
However, they did receive a rare piece of good news this week when it was announced their guaranteed week would be re-instated in October as production is stepped up.
Talking about the pension proposals, Dominic Sandivasci, Pirelli’s UK managing director said: “It is a difficult decision for the company to take, but it is being taken in order to best protect the future of the company.
“Lower projected investment returns, together with longer life expectancy – favourable from a human perspective, but which also creates a negative impact on the fund – have caused liabilities to grow both dramatically and unsustainably.
“The company appreciates this is a worrying and financially challenging period for all our employees, however, this change is necessary to control the volatility and the increase of the cost of future pension provision.
“The action will protect valuable past service benefits that defined benefit section members have built up to date and will provide a long-term, sustainable solution for both employees and the company.”