"After a lifetime's work they deserve the pensions they were promised," say union officials at the centre of Banbury coffee factory dispute

Workers at Banbury's coffee factory deserve to get the pensions they were promised, says Unite the Union which is coordinating industrial action at the plant.

Tuesday, 4th May 2021, 4:40 pm
Updated Tuesday, 4th May 2021, 8:20 pm
JDE coffee factory in Ruscote Avenue, Banbury where the Banbury 300 are fighting 'fire and rehire' threats

Dutch owners of the factory, JDE, say they need to restructure costs to make the factory more competitive. Its ambition is to 'grow the market even further' in Britain and Ireland and it wants to replace the current Defined Benefit (DB) pensions with Defined Contributions (DC) pensions.

Workers say this will lose them many thousands of pounds a year in pension payments when they retire after a lifetime's work for the company.

One source close to JDE said: "We know of workers who are around 40 who have done 20 years' service who would have looked forward to a £30k pension after working 40 years. New calculations they'd only be getting about 18k a year. The same calculations said they'd have to work until they were 80 to achieve the £30k they expected. That is not fair."

The Jacobs Douwe Egberts welcome sign at the factory main gate

A Unite the Union source told the Banbury Guardian: "After a lifetime's work these people deserve the pensions they were promised."

In a letter to staff sent early this year JDE said: "The DB plan is extremely expensive and complicated to run as it is affected by several factors outside our control. The DB plan is now unaffordable and volatile."

Investopedia describes the difference between the two schemes. "A defined-benefit plan - also commonly known as a traditional pension plan - provides a specified payment amount in retirement. A defined-contribution plan allows employees and employers (if they choose) to contribute and invest funds over time to save for retirement."

In the case of the JDE pensions, the coffee factory has always run the traditional plan where the company funds the majority of the pension contribution as part of the workers' agreed remuneration. Employees can top this up if they wish to enhance their benefits.

Now JDE wants to switch to defined contribution pensions. They say workers will receive what they have already accrued at retirement and those affected would receive a 'significant transitional payment'.

When the factory was owned by General Foods the pension scheme was even more generous than today. Retired staff received a 60th of their final salary for every year's service. So after 30 years, workers would get 50 per cent of their final salary. It also included the average of the best three of the employee's last ten years, rewarding those who did regular overtime.

One source close to JDE said: "The JDE pension fund has a lot more assets than liabilities. The pension fund is in a healthy position but they're saying it can't be maintained. This is a company turning over well over a billion pounds a year."

They said production staff had been reduced while some management departments had increased staff. They said workers felt particularly aggrieved because they had continued working hard during the pandemic while some in management and administrative areas had stayed at home on furlough or worked 'odd days'.

A JDE UK spokesperson said: “In January 2021, we announced proposals to close the Defined Benefit Pension Plan to future accrual and instead offer membership to a Defined Contribution Pension Plan.

"These proposed changes will result in more consistent benefits for all our associates with the majority of UK associates currently already benefiting from a Defined Contribution Pension Plan. We understand that change is difficult but the costs associated with these pension plans are a major reason that the UK business is not competitive.”

It is understood the consultation between workers and JDE on pensions ended in late April. The spokesman said "The company is in a reflection period."

"It is... one of the reasons that Banbury Manufacturing is uncompetitive compared to other JDE factories and contributes to higher fixed costs."

The company says the DB pensions create inequality between colleagues on that system and those on a defined contribution scheme. New employees since 2012 have not been eligible to join the DB Plan.