Rolls-Royce makes new pensions offer

Unions at aerospace firm Rolls-Royce are to ballot their members on an improved pension restructuring package

A £1.1 billion deficit in the scheme led the company to make radical proposals to reduce costs. However, union plans to ballot members for strike action forced the company to revise its plans.

The new proposals include the protection of accrued past service at 1/60ths. While future service accrual will be based on

1/80ths. However, this will be calculated on pensionable salary without the Lower Earnings Limit reduction which currently applies, a change which reduces the loss of future benefit for most employees.

The company has given an assurance that it intends to provide increases on pensions in payment, although these will be subject to affordability.

Rolls-Royce has also said it will make a further £35m in contributions, taking the company's total contribution £95m a year. This will be paid indefinitely or until benefits can start to be restored.

Convenor Steve Wright of manufacturing union Amicus said: "Rolls-Royce have come back to the table with a much improved deal that achieves the trade unions aims of securing a final salary scheme, no reduction in the value of past-service benefits, a commitment to long-term funding and a fairer balance between increased company contributions and reductions in member benefits."

The ballot will be on 4 December and the result is expected on 16 December.