O2 union members back changes to final pension schemes – a move which is described as ‘pleasing’ by their employer
O2 workers who are part of the Communications Workers Union (CWU) voted last night to back negotiated changes to their final pension scheme retaining an option to keep full final salary benefits.
Sixty per cent of O2 CWU members voted in the ballot which closed yesterday (February 18) with 94 per cent of voters backing the proposals.
O2 said it was “pleased” with the outcome and said the vote would make its scheme more “competitive”.
Over 2,000 employees who have had pension schemes with O2 (formerly BT) since before 1986 – known as ‘Section Three’ – and between 1986 and 2001 – known as ‘Section Two’ will be affected by the changes.
Employees who have pension schemes with O2 outside these dates and are part of the company’s “defined contribution scheme”, decided in 2001 and called ‘Section One’ are not affected.
Following the vote, a 60 day consultation exercise now commences, during which affected employees will be able to choose from three options depending on what section they are in.
As part of the agreement all affected employees will also be able to obtain independent financial advice to help them chose the option that is best suited to them.
Option ‘One’ is the same for members of both sections – choose to increase contributions from six per cent to 10 per cent with no other changes.
Option ‘Three’ is again the same for members of both sections – employees leave their current section and join either a new pension fund or O2’s Section 1 and receive payment of 21 per cent of their salary for five years and 10 per cent there after.
Payment for Option Three can be either paid in part or full into Section One or taken in cash.
Option Two differs slightly however depending on what section employees are in.
Workers in Section Two, can use this option to increase contributions from 6 per cent to 7.5 per cent and reduce benefits for future service, as the accrual rate changes form sixtieths to eightieths.
The change in accrual rates will also flow through to other benefits such as dependants and redundancy.
Section Three employees choosing this option can also choose for contributions to increase from six per cent to 7.5 per cent, however the arrangement for future contributions differs slightly to employees in Section Two.
Benefits for future arrangements will be reduced from one eightieth and three eightieths automatic cash per year of service to one eightieth with no automatic cash.
CWU deputy general secretary Andy Kerr said: “This is a fantastic result which strongly endorses the work of CWU’s negotiating team.
“As part of the deal members can receive independent financial advice and then get on with choosing which pension option suits them best, with the option of retaining their full final salary pension.”
An O2 spokesperson said: “We are pleased that the CWU have backed our pension proposals which we believe will keep the scheme very competitive.”