US energy major Conoco Phillips has been accused of leaving an “appalling legacy” as it exits the North Sea after 50 years.
More than 100 workers are expected to lose their eligibility to retire at 60 without being penalised as a result of the £2billion sale of Conoco’s UK business to Chrysaor.
ConocoPhillips said it takes its obligations “very seriously”, adding that the changes have always been applicable and that plan members opting to retire at 65 may do so without penalty.
In April the US firm agreed the deal for all of its North Sea operated assets, save for the Teesside oil terminal, which includes the transfer of hundreds of UK workers.
However, in order to expedite the sale, Conoco’s defined benefit pension scheme – a type of workplace pension – was not marketed to Chrysaor.
The normal retirement age for the majority of workers in the scheme is 65, however, 106 employees who joined prior to December 2006 were eligible to retire at 60 without being penalised.
As a result of the Chrysaor deal, those workers who are transferring will need to retire at 65 or are expected to face a penalty of around 4% per year if they take their pensions early.
Conoco highlighted that early retirement was only ever possible for members if they firstly met eligibility requirements and if they are granted company approval.
These members also had the option to retire at 55 under the defined benefit scheme with an annual penalty up to age 60. Employees can still ask to be considered for that option.
Defined benefit is a type of workplace pension based around salary and how long someone has worked with a company.
Conoco said that when employees move to Chrysaor they “will come out of (or become deferred members) of the ConocoPhillips pension plan” and that “affected employees who become deferred Plan members, will not meet the eligibility requirements for enhanced early retirement under the Plan Rules”.
These deferred members will still receive what they built up in their pension with Conoco, they just won’t receive any new benefit accruals in the plan as they move to Chrysaor.
One employee, who wished to remain anonymous, said there is a “great deal of anger and demotivation within the workforce” at the consultation process, with the proposals representing an “appalling legacy” for the company after 50 years in the North Sea.
The Unite union has got involved, telling members to “resist” the proposed changes and said they are taking legal advice.
ConocoPhillips also confirmed that it removed two representatives from its pension board of trustees a fortnight ago after having conversations with them, which Unite described as “a deliberate tactic” which “guarantees that the company will proceed with its intended plans”.
However Conoco said the move was part of a “robust management change” in preparation of completing its UK sale and that trustees do not vote on or have authority to approve or disapprove pension proposals made by the firm.
Unite is also in dispute with Conoco over the nature of the sale, and whether it constitutes a “TUPE” transfer, which would ensure protection of employees’ rights.
The defined benefit scheme will still apply to Conoco workers retained at the Teesside terminal and Conoco’s London trading office.
ConocoPhillips said the decision not to market the scheme in the sale was the preferred option for its objectives and “for the security of benefits” for its 7,000 active and deferred members in the plan, as well as those in pension payments.
A ConocoPhillips spokeswoman said: “ConocoPhillips has been consulting with employees on proposed UK pension changes as a result of its previously announced sale of two UK subsidiaries.
“The company takes its obligations very seriously.”
Chrysaor agreed the deal to acquire ConocoPhillips’ UK business in April, including the transfer of the around 600 staff and 400 contractors, which will make it the North Sea’s largest oil and gas producer.
A spokesman for Chrysaor said all matters relating to the pension scheme are a matter for ConocoPhillips.
He added: “The asset package that was marketed by ConocoPhillips to Chrysaor excluded ConocoPhillips’ defined benefit pension scheme.”