Michelin Tops Up UK Pension Fund

A report in the Daily Telegraph revealed that Michelin is making two emergency payments, together worth nearly £60 million “to plug a £286 million black hole in its UK pension scheme.”

According to the report, Michelin employs 3,500 in the UK and its final salary pension scheme has 5,500 active members, 9,500 pensioners and 11,000 deferred members. The final salary scheme was closed to new members last September and employee contributions rose to 5.25 per cent (from 3.25 per cent) in April. Michelin’s contribution is 13 per cent of salary.

Jim Rickard, managing director of Michelin UK, is quoted as saying “It is not a crisis but it is a concern. It is a big issue.” He explained also that Michelin realised two years ago that something needed to be done regarding the pension scheme and a study group was set up. This has just reported and the two payments are the result.

Mr. Rickard said that dealing with the pension shortfall showed Michelin’s determination to secure the company’s long-term future in the UK. The company is reported to be investing £1 million in its Stoke-on-Trent facility over the coming five years, plus £4 million in its Dundee factory (over three years) and £14.5 in its factory at Ballymena, Northern Ireland.