West Midland workers with global giant TRW face smaller pension payouts which could see their retirement hopes devastated.
TRW Ltd, a subsidiary of TRW Automotive, said it was seeking to close its UK pension scheme to future benefits for more than 2,700 current employee members.
The move marks another hammer blow to workers across the TRW Ltd group less than six months after the parent group announced 180 job losses at its sites in Perry Barr, Mere Green and Solihull.
The TRW scheme, which includes the former Lucas Pension Scheme, has a total membership of around 56,500 individuals, with over 2,700 employee members.
But unions locked in talks over the proposal are bitterly opposed to the closure plan which could see some workers face potential halving of their anticipated retirement funds.
Employees who joined a UK business of Lucas, LucasVarity or TRW prior to April 2009 are part of final salary schemes, which have now closed to new employees as part of measures to manage pension risks.
Secretary of the TRW Pension Scheme’s Trustee Board Roy Middleton, said: “We are in the process of the regular actuarial review of the scheme.
“The advice we received from both our actuarial and legal advisers is that the Trustee needs to take immediate action to protect the accrued benefits of our Scheme members.
“In simple terms, our proposal is to close the scheme to future benefit accruals in order to focus on ensuring that we can honour commitments related to all contributions received and benefits accrued to date.
“The financial crisis of the last nine months has had a significant impact on the Scheme’s assets and liabilities by changing its ongoing funding position.
“We have been taking appropriate action to manage Pension Scheme risks over the last several years.
“However, like all Pension Schemes we face the challenge of escalating liabilities due to reduced returns on investments and the positive fact of longer life expectancy.
“We have started the consultation process regarding a plan to cease future benefit accruals for employee members of the Scheme in order to safeguard the accrued benefits of all Scheme members.”
UK Human Resources director Graham Plumley said: “This is not a proposal that has been made lightly. We understand that the Pension Scheme is an important element of our overall compensation package.
“This is an extraordinary step following the unprecedented global financial crisis. It is the duty of the Trustee Board and the Company to take all appropriate actions to safeguard the benefits that have already been accrued by both our current and former employees.
“We will undertake a detailed process of informing and consulting with our employees.”
The consultation process has commenced and is scheduled to continue until the last week in September.
TRW has three sites in the West Midlands, a manufacturing operation at Perry Barr, another plant at Mere Green and a campus at Solihull with a range of research and development, corporate, engineering and sales activities.