S&N pensioners angry with Heineken
Heineken is front row and centre of a PR disaster. Thousands of pensioners from the former Scottish & Newcastle (S&N) brewery, represented by the S&N Pensioners Group think that the company’s new owner, Heineken, has not honoured pension promises. On 6 June 2011 the S&N Pensions Group (SNPG) made big headlines. Following Heineken’s announcement that they would not provide a discretionary pension increase in 2010, SNPG screamed murder because they think Heineken’s decision was in defiance of an assurance given by Heineken when they bought S&N in 2008.
UK newspapers report that SNPG has even called for Heineken CEO Jean-François van Boxmeer to be summoned before a parliamentary committee in the UK.
The group claims that Heineken has abandoned a decades-long policy of providing inflation-linked pension increases. This was a very well-established practice, if not legally guaranteed.
The commitment to inflation-linked pension increases relates to S&N pensions built up in the scheme before April 1997, before which such increases were not mandatory.
SNPG says Heineken paid an inflation-linked pension increase in 2008. There was "understandably" no inflation-linked rise in 2009 when inflation was virtually zero. However, the Dutch brewer paid nothing for 2010 when inflation was running at more than 4 percent.
SNPG points out that, although the word "discretionary" was used formally in the takeover relating to such payments, S&N’s Dutch owner has acted "in bad faith" given that it was well aware the Scottish management had a "near-perfect record" of making such payments going back to the 1970s.
The group is outraged over Heineken’s decision. To pensioners who are 70 and 75 years old and perhaps on pensions of GBP 6,000 and GBP 7,000 a year (EUR 7,000 – EUR 8,000), a retail prices index-linked pension means a lot.
A Heineken spokesman was quoted as saying: "We have certainly not broken any commitments. The decision we took last year was based on the outlook for our pension fund at the time and will be reviewed again this year.
As a responsible employer, we have put in place a strong recovery plan for our pension fund. We understand the depth of feeling expressed by those affected and will continue to remain in dialogue with them."
The pensioners’ claim may be without legal merits. According to some commentators Heineken is not obliged to adjust the pensions for S&N for inflation.
Unfortunately, this will not mitigate the public’s anger over Heineken’s decision. Pensions are a big worry to every Brit these days which is why newspapers left and right have played the issue big-time. No one has forgotten the numerous pension scandals of the 1990s. The most notorious was the media tycoon Robert Maxwell, who was looting the pension funds of 32,000 employees on a colossal scale to maintain the share price of his stock in the Mirror Group before he drowned in the Atlantic in 1991 and the companies he owned were declared bankrupt shortly afterwards.
Companies may not be pilfering pension schemes any longer, but that does not mean that pensions are safe. In May 2011, the UK Pensions Minister Steve Webb warned that Britain is on the brink of a pensions mis-selling scandal, with thousands of workers robbed of their nest-egg. He was quoted as saying that workers were being bribed into leaving their generous pension schemes for a cheaper alternative.
He fears many workers are being cruelly misled into switching out of their gold-plated pension with the lure of cash bribes. Mr Webb has allegedly uncovered evidence that bosses are offering “cash incentives” to move pensions into drastically inferior alternatives. For example, they are offered a lump sum of GBP 10,000 (EUR 11,000), but do not realise that they are losing GBP 100,000 (EUR 111,000) of pension benefits.
In a cynical attempt to persuade workers to leave the pension scheme, many bosses make the cash offer just before or after Christmas, when many people are feeling the pinch, it was reported.
Meanwhile, The Times newspaper writes on 6 June 2011 that the row between Heineken and S&N’s pensioners could put the spotlight on Charlene de Carvalho-Heineken. According to the newspaper, she and her husband Michel de Carvalho have received GBP 580 million (EUR 650 million) in dividends since 2000, which "should provide plenty of ammunition as the S&N furore escalates".
The Dutch will need all their PR skills to calm down this media onslaught. UK hacks are like bloodhounds. And probably rightly so. As The Economist newspaper commented on 20 May 2011: "For all the faults of the British press, it is fundamentally a good thing that we hacks accept we are below the salt, that we pursue a trade and not a profession, and that we can never truly be friends with or equals of the powerful people on whom we report, no matter how well we may get on with some of them. At the end of the day, if the public interest demands it, we should be prepared to burn every bridge of friendship and attack."
