Bovis employees face loss of generous pension after parent company demands cost-cutting
Bovis has been told by Lend Lease, its Australian parent, to cut costs by scrapping its final salary pension scheme.
It is understood that the move, which will apply across Lend Lease’s UK operations, is the company’s response to a period of low profits from its UK business. Its European and UK businesses reported a £40m loss in March last year.
The company is involved in a 60-day consultation with staff on the proposals, which is due to be completed at the end of June. It is proposing to move staff to an average salary pension scheme, with additional top-ups specific to individuals.
About 900 Bovis employees are members of the final salary scheme. Their pension level will be calculated from the date that the scheme is ended, and any further benefits will be assessed using the less generous defined contribution method.
The move has angered many employees, one of whom described the proposals as “outrageous”. He said: “It’s deeply disappointing for people to be told this now, particularly if they’ve stayed with the company for a large number of years.”
A Bovis spokesperson said: “Like many businesses, Lend Lease believes these changes are necessary because the costs of a final salary scheme are no longer sustainable. Making these changes will create more certainty for the organisation in the future.”
Lend Lease’s 2007 accounts put the deficit in Bovis’ pension scheme at £84.4m.
Bovis has responded to a number of problem contracts by focusing on fewer clients and undertaking schemes where its parent company is the developer, including the £800m Olympic village in east London.