THE DISPUTE

The dispute centres on a disagreement between Grangemouth staff and management over changes to the company's pension scheme for both new and existing workers.

Refinery operator Ineos is proposing to retain an invested final-salary scheme for all existing members, paying 1/60th salary for every year worked.

But workers will be forced for the first time to contribute 6% of their salary to the scheme, which was non-contributory for many, and the retirement age will rise to 65. The plan would be phased in over six years.

New starters would be offered a defined contribution pension plan - generally regarded as inferior. The key difference between this and final-salary is that all investment risks and rewards are assumed by each worker and not the employer, making it more difficult for individuals to assess the level of income they will receive from their pension.

Final-salary schemes are seen by many as the holy grail of pension schemes, giving retired workers a set percentage of their final salary as a pension depending on their length of service and usually for an unvarying contribution of a set percentage of income.

Ineos says it is only part-way through a broad consultation on the pension reform, which started in September 2007 and is due to end on June 30.

The company has said no major changes will be implemented for existing employees until 2009 and these will be phased in over time. It says this goes well beyond the statutory 60 days' consultation required by law.

Ineos says the current scheme costs it one-quarter of the salary bill at Grangemouth compared with the industry norm of 16%.

But the union Unite claims the company is not under financial pressure to reduce pension costs, because the scheme has a surplus of £24m.