Treasury may have to float 800 million-pound pension fund for nuclear industry workers

Treasury may have to float 800 million-pound pension fund for nuclear industry workers

	Published : Tue, 27 Dec 2005 18:05 By : Cedric Benson Print this Story

LONDON: The British treasury may have to meet an 800 million-pound requirement to protect the pensions of some 14,000 nuclear industry workers, who are being planned to be moved into the private sector. Actuaries have estimated that the government will require this amount to set up a fund to guarantee public sector pensions these employees are entitled to under law when they are moved out to private sector.

The public sector pensions are unfunded and payments are made out from tax income.

Unions representing these workers are now worried because chancellor Gordon Brown may attempt to offer a lower level of pension for these workers and they are in no mood for any negotiation.

The government intends to convert nearly 50 per cent of the contracts covering maintenance and decommissioning, now run as part of the British Nuclear Fuels and Atomic Energy Authority, which is state-owned, into tender from 2008.

Unions fear the workers who are part of the current scheme would be turned over to private sector contractors, but none of these contractors would be willing to take responsibility for the liberal retirement benefits these workers now enjoy. The treasury, saddled with revenue deficits, will in all probability try to shortchange the workers, they aver.

However, the government, through the Nuclear Decommissioning Authority, is trying float an industry-wide pension scheme and infuse funds so that its tendering process does not flop. Consultations on this scheme have begun and will end in March, according to sources. Leading actuaries have estimated that fund requirements for the scheme would be in the range of 500 million pounds to 800 million pounds on the assumption that each of these workers are paid an average wage of 25,000 pounds and had an average period of service of 10 years.

Pension for workers in the nuclear industry are safeguarded by the 2003 Energy Act, ensuring that their final salary scheme packages are liberal and these are protected by law.

The actuaries have apprehensions about the administration of the scheme, especially on issues relating to new employees. They point out that this could lead to anomalies as two persons handling the same job may draw different benefits.

The firms, which have expressed interest in bidding for the 2 billion-pound work, are construction major Amec and U.S. companies Fluor and Bechtel. If the process goes through, the employees of British Nuclear Fuels will be transferred to the private company's rolls.