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My Ref: MRP 3/6
9th December 2013
Circular Num: NP/341/13
To: The Secretary All Branches & Regional Councils
DHL SUPPLY CHAIN – PROPOSAL TO CEASE FUTURE ACCRUAL IN THE DEFINED BENEFIT SECTIONS OF THE DHL GROUP RETIREMENT PLAN
Management announced in April 2013 that they were proposing to cease future accrual in the Defined Benefit (DB) sections of the DHL Group Retirement Plan from 31st December 2013. This would affect in the region of 3,700 DHL employees who are active members of the three schemes in the plan, namely Exel, Ocean, and Tibbett & Britten.
In place of the DB Plan, management proposed to introduce an inferior Defined Contribution (DC) pension scheme for those contributing members.
The RMT made it clear to management from the beginning of the consultation process that they objected to this proposal and would take the necessary action to keep the DB Plan open for future accrual.
In line with the General Grades Committee decision of 9th May 2013 the RMT requested a joint meeting with all recognised trade unions to get a united position and halt management’s proposal.
Following a meeting with our sister unions, the GMB, Unite the Union, Unison and URTU it became clear that the ceasing of future accrual would not be fought industrially. Instead the majority unions agreed to concentrate on improving the proposed DC arrangement.
Despite this position the RMT made a number of proposals to keep the DHL Retirement Plan open for future accrual which were actuarially costed by the employer. While the RMT proposal would, if implemented, reduce future member benefits in the DHL Retirement Plan they would still give members security and a promise in retirement.
The results of the costings were shared with the RMT which showed the employer pension costs would reduce to below that of the proposed DC arrangement and the risk associated with the DB Plan reducing by over 50% if implemented.
Management informed the RMT on 25th November 2013 that despite these massive financial savings and risk reductions they would be closing the DHL Retirement Plan from 31st March 2014. As you will note a delay of three months from the original closure date.
While management stated at the beginning of the consultation period that they were willing to consider counter proposals put forward, this now seems nothing more than carrying out the legal obligation in regards to consultation.
It now seems that management wanted zero risk, in other words the DB Plan closed for future accrual regardless of any alternative proposals.
It would be naive to think that this was not the intention of the company from the beginning but it is in the experience of the RMT DB schemes can be kept open so long as the employer is prepared to consider alternatives to closure. As demonstrated by the RMT proposals pension scheme members can continue to receive a promise of a certain level of pension at retirement while the employer reduces their risk and costs.
Clearly ceasing future accrual was the only aspiration of the company.
Following management’s confirmation the RMT General Grades Committee Pensions Industry Wide Sub Committee made the following report:
“That we note our representatives have achieved some moderate concessions. We therefore note the position and place any developments in front of the General Grades Committee.
All Branches and Regional Councils to be advised.”
In consideration the General Grades Committee adopted the above report on 3rd December 2013:
“That we note and adopt the report from our Pensions Industry Wide Sub Committee.
Further, a personal letter is to be sent to all affected members, fully explaining that this union will not be endorsing the Company’s disgraceful plan to end future accrual.
That being said as the minority union involved, we recognise there is no industrial support to fight from our sister Trade Unions and therefore we have noted the position.”
As already expressed above the RMT will not be formally endorsing the proposals as this union believe that management’s actions to cease future accrual in the DHL Retirement Plan are unnecessary. The RMT proposals were more than fair in that the employer would save money and also reduce their exposure to risk.
The RMT representatives have led the way in trying to keep the DHL Retirement Plan open for future accrual but sadly consultation and negotiation was not enough to keep this DB pension scheme open.