Industrial strife over pensions at Barclays as retirement crisis hots up

Union threatens strikes over bank's plans to axe its pension scheme. More could follow, says James Moore

Barclays might have avoided the sort of disasters that forced rivals Lloyds TSB and Royal Bank of Scotland to go cap in hand to the Government. But if its executives were congratulating themselves, they are going to have to postpone the celebrations: the bank with the blue eagle now has a serious industrial relations problem to contend with.

The banking union Unite plans to ballot 25,000 members about strike action over the bank's decision to close its final salary pension scheme. The bank is the first to target existing members – all of them have closed their schemes for new members – and how the dispute plays out will be closely watched by rivals, particularly Lloyds Banking Group, which is reviewing its pension arrangements following its merger with the stricken HBOS.

Unite's move comes after a week when the mounting pensions crisis facing Britain has been heating up again. Deloitte, the accountancy firm, on Wednesday estimated that the combined funding shortfall of schemes run by FTSE 100 companies had more than doubled to £300bn since the beginning of the year (Barclays contributes something over £2bn). On the same day, American Express – which offers a far less generous pension providing no guarantees to workers – unilaterally said it would stop paying any contributions into it.

Ros Altman, the former government pensions adviser, says: "The lasting legacy of the credit crunch will be the decimation of future pension provision. Employers are increasingly withdrawing from pensions and we will face a situation where we have armies of pensioners in poverty."

Unite has decided that enough is enough. The union says that when it consulted members among Barclays staff, 92 per cent were in favour of a strike ballot – and with 25,000 members across a huge swath of Barclays UK operations, it has the potential to cause the bank a serious problem.

The turnout was 35 per cent, which is remarkably strong for a postal ballot involving letters sent to members' homes. Similar exercises on issues such as pay achieved turnouts of less than a fifth.

The replacement Barclays is offering, called "After Work", is still generous. It offers a guaranteed cash sum when a member retires, plus the opportunity to top it up with a second scheme that the company will also pay into but provides no guarantees. Crucially, however, the income members receive from "After Work" after they retire is not guaranteed, by contrast to the plan that Barclays wants to close, which pays a percentage of an employee's final salary.

Unite says that staff are in effect facing a stealth pay cut. Derek Simpson, Unite joint general secretary, says: "It is unacceptable that Barclays are proposing this unilateral change to workers' pensions. Unite members will not stand by as their employer rides roughshod over their retirement security. The forthcoming ballot within Barclays will send a strong message to private sector employers across the economy. Unite will not accept businesses using the economic downturn as a means to erode the important terms and conditions of our members."

The TUC says that unions accept that employers are facing pressure over pensions, particularly as people live longer, which is progressively raising the cost of final salary schemes. Where this is the case, unions will talk. Nigel Stanley, head of campaigns, cites recent discussions with BT as an example. But he says many companies are simply using the recession as an excuse to cut costs.

"This is not acceptable. The pensions regulator gives companies up to 10 years to deal with a deficit. By that time the recession should be over – we'll probably be in the next one – and the stock market will have risen to deal with deficits. We think that a lot of what is going on is that employers are effectively stripping out costs. Unions will resist this," he says.

Strikes over pay are relatively rare today, particularly given the recession and rising unemployment. But industrial action over pensions – or the threat of it – is increasing.

However, some pensions experts argue that the private-sector final salary scheme is doomed, one way or another, and unions may be better off fighting for the best possible replacements.

Tom McPhail, head of pensions research at Hargreaves Lansdown, is of this view. "The problem is that all these schemes have been handing out guarantees which they can't afford to pay. Unions would be best advised to negotiate good alternatives."

Mr McPhail also says the current pensions crisis could be just the start of a much wider financial time-bomb.

"It's not just pensions. There is also the looming spectre of paying for long-term care for an ageing population. The bill for that is potentially horrific."

Ms Altman says politicians are negligent in failing to address the issue. She describes state provision as hopelessly inadequate, and argues that as employers pull out of pensions, the Government will need to take action.

She describes the review into pensions by Lord Turner, the chairman of the Financial Services Authority, as "a wasted opportunity". While the subsequent legislation set up individual pension accounts from 2012 which employers will have to contribute to (thus forcing the like of Amex and any followers to come home from self-declared pensions holidays), she says it does not go nearly as far as it should.

"At the moment, politicians are just sticking their heads in the sand. In 2012 most people should be saving around 8 per cent of their salaries, but it needs to be more like 15 per cent or even more."

Steve Webb, the Liberal Democrat pension spokesman, says he plans to call for a second "Turner review" to address these issues and the growing imbalance between generous public-sector arrangements – where final salary schemes are still the norm – and the increasingly threadbare private-sector provision.

"This is an urgent issue that has regrettably been kicked into the long grass," he says.

In the meantime, Barclays, which has enjoyed a good relationship with Unite until now, says it wants to talk: "It is our firm belief that the interests of all stakeholders are best served through continued open dialogue. We are therefore disappointed that Unite have chosen not to re-engage.

Unite says that it is happy to talk if Barclays will only commit to not destroying its pension scheme.

The bank's industrial relations face a chill winter – and it is unlikely to be alone.

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
News
news
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
PROMOTED VIDEO
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Arts and Entertainment
La Roux
music
Arts and Entertainment
Graham Fellows as John Shuttleworth
comedySean O'Grady joins Graham Fellows down his local Spar
News
people
News
Ross Burden pictured in 2002
people
News
Elisabeth Murdoch: The 44-year-old said she felt a responsibility to 'stand up and be counted’'
media... says Rupert Murdoch
Arts and Entertainment
tv
Extras
indybest
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Java Developer - Banking - London - Up to £560/day

£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...

HR Business Analyst, Bristol, £350-400pd

£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

Account Manager - (Product & Account Management, Marketing)

£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried