Letter: Pension planning

I REFER to Tom Ward's opinion piece (Perspective, 1 June). He is wrong in relation to undertakings that were given as part of the 2008 acquisition of Scottish & Newcastle.

There was no open-ended commitment to continue Retail Price Index-based pension increases. It was made clear that the practice of annually considering whether to award discretionary increases to pensions in payment would continue. It was also made clear that these increases were not guaranteed.

Mr Ward also fails to mention the very significant commitment that Heineken NV made at that time, in relation to the wellbeing of the S&N Pension Plan. This included a 50 million accelerated contribution in 2008 and a very valuable funding guarantee for all of the plan's liabilities.

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Like many in the UK, the S&N pension plan faces considerable pressures and a difficult economic climate. To address these pressures, Heineken has injected significant cash funds and put in place a 12-year recovery plan, which involves additional cash contributions, rising to as much as 61m per annum by 2014.

In October 2010, the difficult decision was taken not to award discretionary increases to pensions in payment for the year ahead. Discretionary increases will be reviewed later this year in relation to the coming year's payments, and that process will be entered into with an open mind.

From July, for existing and future staff, we will move from a defined benefit scheme to a high- quality defined contribution arrangement. This will provide benefits that are competitive and, importantly, sustainable.

Whilst we recognise the concern and depth of feeling amongst those pensioners affected by the decision in 2010, we strongly believe that this was the right decision given the circumstances at the time. Heineken has fulfilled its commitment to support the S&N pension plan and continues to do so by acting for the long term sustainability of the plan and in the broader interests of all pension stakeholders.


Managing director

Heineken UK Ltd