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Last Updated:  Monday, 17 March, 2003, 17:58 GMT
BAE pension strike threat 'easing'
BAE employees
Workers are worried their pensions will be cut
The union at the centre of a pensions dispute with BAE systems claims it is winning concessions from Britain's biggest arms maker.

The Transport and General Workers Union (TGWU) told BBC News Online that BAE had agreed to give a host of assurances as to the future of the employee pension scheme.

In addition, the company had agreed to make up a substantial proportion of the estimated 2.3bn black hole in the company pension scheme.

However, the TGWU added that they had not gotten everything they wanted and as a result the threat of industrial action, although diminishing, remained.

Action threat

BAE is in the process of conducting a full pensions review and back in February drafted a series of proposals to ensure that the company pension scheme had enough funds to meet future liabilities.

In return for keeping final salary benefits, existing scheme members were told they would have to up their contribution levels.

The move would affect seven pension schemes and 57,000 workers at 63 UK sites.

The TGWU claimed that on average employees faced having to pay up to 20 a week more into their pension and threatened industrial action.


The TGWU was furious that its members are being asked to up contributions to plug a black hole which can be partly blamed on the company having taken a series of contribution holidays during the 1990s when stock market performance was strong.

The union asked BAE to reconsider the contribution increase and to give a series of assurances that members would reap the benefit of future schemes' surpluses first rather than the company.

In response, BAE have assured the union that it intends to keep the final salary scheme and that if the pension scheme moves into surplus over the next three years members could see their contribution levels cutback.

In addition, a TGWU spokesperson told BBC News Online that BAE has offered to make up 60% of the pension shortfall, leaving increased member contributions to make up the rest.

This is a significant move as the company originally wanted members to make up half the shortfall in the fund.

"The company has made some important concessions but they still have much further to go. I would say that industrial action is now further away than when the pension review began but it is still a possibility, " TGWU spokesperson said.

The unions will now report back to their members in Royal Ordnance and BAE and further negotiations will follow.

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