By Ian Pollock
BBC News personal finance reporter
Millions of workers may soon find that their employers try to close their pension schemes to current members and offer them a less generous alternative.
Rentokil staff are being moved to a new pension scheme.
That is the situation facing staff at firms like Rentokil, the Co-op group, Arcadia and the Yorkshire and Clydesdale banks.
These companies have decided that the pensions they promised for many years are now too expensive - and the staff will have to accept a new scheme that is rather less generous.
Nick Eyre, group secretary at the Co-op, reckons that many more employers will be copying his example: "Hundreds of companies are going to do this. It's going to become a very common feature over the next six months."
Changing your contract
If the staff do not like the proposals, the first thing they should do is check their employment contracts.
These vary from employer to employer when it comes to describing any pension provision.
Some may promise to offer membership of a traditional final salary pension scheme - not just whatever scheme the company happens to be offering at any one time.
Ivan Walker, head of pensions at the law firm Thompsons, which specialises in working for trade unions, says it does happen from time to time: "A company may have been taken over, or the pension scheme been merged in the past, with a promise to members of no change to the pension scheme.
"Later the employer says they want to cut back on benefits for future service - and someone digs up the old promise."
If that promise is made, then this may be a big legal hurdle for the employer to jump.
An attempt to force workers to accept such a change might be a breach of the employment contract and could expose the employer to a charge of constructive dismissal at an employment tribunal.
This would be a high risk strategy for an employee to take because they would actually need to resign from their job to sustain such a claim.
And they might fail if the employer argued, successfully, that they simply had to close the scheme because it was a commercial necessity, for instance as an alternative to going bust.
That was the decision of an Employment Tribunal in London in September 2004 when some staff complained they had been unfairly dismissed by a large firm of solicitors for not agreeing to the closure of their final salary scheme.
Can the scheme be closed?
It is important to check that the employer does have the power to close the scheme, and to check if the trustees have to agree as well.
This should be laid out in the rules of the scheme, generally be known as the "Deed and Rules".
Most scheme members never bother to look at them. And normally there is no reason why they should.
But there is no such thing as a standard set of rules. They vary tremendously from scheme to scheme.
Some give employers absolute power over certain changes; some changes may require the agreement of the trustees; other rules may even give the trustees more or less absolute power over changes.
"Some rules have entrenched provisions which prevent changes for the future," points out Christopher Berkeley, head of pensions at the law firm Pinsent Masons.
As a matter of course, the full Deed and Rules should be available to all scheme members from their scheme's administrators.
There may be one very important wrinkle in a scheme's rules.
It is possible an employer's decision to close the scheme to existing members might trigger a decision of the trustees to wind up the scheme altogether, not just run it as a closed fund.
That would probably be horribly expensive and might deter the employer from venturing down this path.
However, this did not deter Rentokil from announcing it wanted to close its pension scheme, even at the cost of making extra payments amounting to almost £400m over the coming years.
Obliged to consult
Even now, a sensible employer will consult staff over making such a big change to its pension provision. Arguably, any employer has a duty of good faith to do so.
But from this coming April, this obligation to consult the affected scheme members becomes enshrined in law as a result of the 2004 Pensions Act.
Prospective members, such as workers who have not yet joined the scheme, should be consulted too.
That consultation might involve trade unions or other staff representatives; asking scheme members to submit their opinions by e-mail or letter; and holding staff meetings, seminars and road shows to provide adequate and accurate information and seek feedback from the staff.
There is even the option of a ballot. That is what is happening with the 9,000 staff of the Yorkshire and Clydesdale banks, who are being asked to support the replacement of their final salary scheme with one based on average salary.
But crucially, "consultation" does not mean "agreement".
This was welcomed by Jay Sheth, a senior policy officer for the employers' organisation, the CBI: "We have always supported the idea of consultation - but employers need the power to redesign schemes in line with the company's financial position."
That does not give employers carte blanche to embark on a sham consultation exercise, going through the motions with no intention of taking on board any views they may get from the staff.
"Some consultations are a sham, some aren't. A lot think consultation is just telling," according to Eleanor Lewington, pensions officer at the retail trade union Usdaw.
If employees think that is what is happening, they will have the right to complain to the Pensions Regulator who can fine the employer.
However, a spokeswoman for the pensions regulator pointed out: "We don't have powers preventing employers making changes for future provision."
Negotiation may work
In many cases, the strictly legal position of employees will probably be quite weak.
"The law is not necessarily going to help them," says Ivan Walker of Thompsons.
If an employer has decided in advance it wants to close its pension fund to current members, it may be hard to persuade it to change its mind altogether, at least by reasoned argument.
Even so, negotiation, especially where there is a strong trade union, may produce agreement.
The Pensions Management Institute believes that quietly, behind the scenes, many pension schemes are being changed by agreement, after consultation and negotiation.
"Changes are in practice being made and agreed in quite a few companies where the dynamics of the business and the risk have been explained," said the Institute's Penny Green.
If negotiation fails, then the next obvious lever for disgruntled workers is the threat of going on strike or some other form of industrial action.
Pensioners protest outside Labour's 2004 conference
This is what British Gas engineers did just before Christmas.
As a result, the company allowed 1,700 trainees and junior staff to join the scheme before it closed to new members and the company agreed to inject more cash into its fund.
Whatever approach aggrieved workers take, it seems certain they will form a swiftly growing category.