Ford Faces Legal Threat on Pensions

By the Financial Times

Ford(F) is facing the threat of legal action over the pensions of thousands of former employees of Visteon, a bankrupt U.S. supplier group formerly owned by the car company, whose U.K. arm went into administration last year.

In a letter to Ford, lawyers for the Unite union accuse the car company of providing "misleading" advice to staff when their jobs were transferred to Visteon in 2000, telling them their accrued pension rights would be protected.

Last year, Visteon U.K. closed three plants and the remaining 600 workers lost their jobs after cumulative losses of £800m in the nine years since splitting from Ford. Its core U.S. business later filed for Chapter 11 bankruptcy protection.

Angry workers picketed and occupied Visteon's plants in Belfast, Basildon and Enfield. The union won more generous redundancy pay, but the dispute over pensions has simmered on for more than a year.

Unite says the 3,000 people employed by Visteon in 2000 who were now eligible for pensions were relying on the government's Pension Protection Fund, which for some could mean a cut of up to half in their entitlements.

Ford says it has "met or exceeded" its obligations, but Unite is threatening legal action if the company does not pay compensation.

Roger Maddison, Unite's national officer, said: "Hundreds of workers, many of them close to retirement, were sacked at a minute's notice and lost their pensions. We believe Ford misled many of these workers leading them to believe their pensions were safe with Visteon."

He said Ford had failed to set out the risks associated with transferring the assets staff had built up with the car company and now many of these workers faced vastly reduced pensions.

"The workers' fight for justice won the moral argument and succeeded in getting vastly improved redundancy terms. Now the fight for pensions justice begins," Mr Maddison said.

Ford said it met or exceeded its obligations when Visteon became fully independent, covering the transfer of employees to Visteon UK and their pensions into the Visteon fund.

"The situation for former Visteon UK employees is unfortunate, but the responsibility for administering and funding their terms and conditions was Visteon," Ford said in a statement. "Ford's obligations to its former employees were fully discharged and Ford believes there is no basis for resuming liability for benefits transferred to Visteon."

The union argues that were it not for Ford's pension advice, some workers would have applied to stay at the car company or opted not to transfer their accrued pension rights or retired before the transfer.

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