Thousands of Smiths Industries retirees have been shocked to find they are not getting the raise they expected in their salaries this month. They claim that Smiths Group reneged on its commitment to pay the full 7.5% retail price index-based increase that should have been granted to them under their pension plan rules.
Smiths Industries was an aerospace company which had a large base at Bishop’s Cleeve, near Cheltenham. It changed its name to Smiths Group plc in 2000 and sold its aerospace division to GE in 2007. The site, along the A435 on the edge of the village, is still managed by GE Aviation.
The 12,000 pensioners, many of whom live in the Cheltenham and Bishop’s Cleeve area, have received a letter from Mercer, the administrator of the Smiths Industries Pension Scheme, telling them Smiths is only prepared to pay a 5% raise . Pensioners say that’s even though the scheme’s pension pot is fully funded to the point that administrators recently gave the company a ‘contributions holiday’ worth £12million a year.
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Mercer’s letter also incorrectly stated that the five percent increase was equal to the December RPI of seven and a half percent on which the increase is based. Pensioners claim that in a number of cases they have been quoted pension payments that are grossly incorrect.
Mike Bridgman, a Smiths retiree and former manager of the aerospace business at Bishop’s Cleeve, said: “Quite frankly, the way this has been handled by the business is both disappointing and confusing.
“As early as 1998, they pledged to pay inflation increases of up to 10%. While anything above 5% is at their discretion, this increase costs them nothing.
“The money comes from the trustee who has recommended full payment and the plan is 108% funded. Withholding payment when Smiths retirees – many of whom have contributed to the scheme for more than 30 years – are facing massive increases in fuel and food bills, is inexplicable. It will seem to many that the company prioritizes profits over retirees.
He added that senior management changes had recently been made at Smiths and he hoped that the planned discussions between the company and the directors would result in the full payment of the increase. He said that in the meantime, worried pensioners have rioted and filed complaints about the misleading letters they received from Mercer and the disappointing way they were treated by the company.
A Smiths Group spokesperson said: “After careful and thorough consideration and after taking professional advice, we have decided not to offer a discretionary RPI increase to affected members. Our decision not to accept an increase of more than 5% took into account a number of factors, including the desire to preserve the financial security of the fund for all of its members, the long-term objective of guarantee the benefits of all members with an insurance company and the current macroeconomic environment.
A Mercer spokesperson said, “As a policy, Mercer does not comment on its customers.”