Select committee chair raps water firms' pension closure plans in letter to Ofwat
Chair of the Work and Pensions select Committee, Frank fields has condemned proposals by Anglian Water And United Utilities to close their defined benefit pension schemes in the light of their “considerable profitability and munificent attitude to shareholders.”
In a letter to the chief executive of Ofwat, Rachel Fletcher, Fields acknowledged that “Various factors have led to pension schemes across the defined benefit landscape experiencing well-documented funding pressures in recent years.” But he asked the regulator to consider that in the context of Angian’s and United’s profits over the past five years which he said each totalled £1.6bn with Anglian paying half in dividends and United handing out £1.2billion.
Fields questioned the fairness of the water companies “privileged position” as monopolies with “no effective restraint on these firms' policy of distributing massive sums to shareholders while cutting the pension benefits that their employees are counting on for their retirement.”
He requested Fletcher’s view of the companies’ proposals and an explanation of Ofwat’s power to influence dividends, executive pay and pension funding. He also wrote:
“In 2014 Ofwat granted companies leeway to recover some of the costs of deficit repair contributions through customers' water bills until the early 2020s, but noted that ‘there are strong arguments for shareholders to bear these costs in future.’ What strong arguments are there for already well-rewarded shareholders to be spared these costs through the closure of the schemes?”