Anglian Water tries to head off pensions walkout

Roy Pointer, chief executive of Anglian Water, will meet union officials this week in a bid to stave off a strike over pensions.

After calling off a strike planned for last week, unions have set a new deadline of 26 April. They warned that the company's 3,000 workers, who have already voted overwhelmingly in favour of strike action, will go ahead with a walkout if management does not compromise over its pensions policy.

Mike Jeram, national secretary at Unison, said water supplies to customers would not be affected by industrial action. But he added that it would hit Anglian Water's services and performance levels, just when the company is under scrutiny from the water regulator, Ofwat.

The regulator is reviewing the performance of all the water companies before it sets the new five-year pricing plan in November. Mr Jeram said: "We want to embarrass management in front of Ofgem. Other services will be disrupted."

As part of a recent restructuring, Anglian Water decided to outsource some of its operations. The workers affected are being transferred to new employers.

Anglian Water, owned by AWG, had promised that the workers' pension benefits would not be affected by the change in employer. But in December, the company went back on a promise that outsourced workers would continue to receive a final salary pension. Instead, the workers will be treated like new members of staff and will have to join their new employer's defined benefit scheme.

Almost all companies in the UK have closed their final salary pension schemes, which commit them to making pension contributions on the basis of workers' final salaries, giving employees greater security.

Payouts for a defined benefit scheme, which Anglian Water says outsourced workers must join, are determined by the performance of the pension investment that is made on behalf of the worker. The level of payout is less predictable and can be lower than in final salary schemes.

Last year, utility companies reported a pension deficit of around £5bn. Although equity markets have recovered to help reduce the deficit, the companies want the regulator to allow them to raise prices to help meet the remaining shortfall.