Pensions expert defends Electra(3)

A leading pensions expert has defended London-listed Electra Private Equity, after the listed trust became the latest target for activist trade unions following a reduction in pension benefits for ex-employees of its portfolio company Lil-lets.

Mark Wood, chief executive of pensions buyout specialist Paternoster, has hit back on behalf of the industry after Electra Private Equity, a London-listed investment trust, was heavily criticised by trade unionists for cutting pension benefits at its portfolio company Lil-lets.

Electra bought Lil-lets, a feminine hygiene products maker, for about £80 million in December last year, and subsequently shifted production from the UK to Taiwan and South Africa. Employees over 50 years old who chose to retire at this point were awarded full “consent pensions” with no reduction for early retirement, which were awarded at the discretion of the scheme’s trustees. However, Electra has now put a stop to this, according to trade union Unite.

Unite spokeswoman Lynne Shakespeare said the 46 employees involved have now seen their pensions drop by as much as 30 percent. “What Lil-lets are doing is highly immoral and unfair to their Birmingham workforce when they have honoured consent payments in another UK site which they closed in 2003.”

She added: “Again it is private equity business who are ripping off British workers for their own greed”. Unite now plans to take its campaign to Lil-lets’ customers, “to highlight that Lil-lets is deserting its loyal work force to head off to other countries to maximise profit and exploit cheap labour”.

However, Wood said that the UK firm was being unfairly maligned. “The criticism of Electra seems entirely unjust. As reported this appears to be a case where trustees have been generous with benefits; more generous than would generally be the case. There seems to have been too much money going out to those who have taken early retirement.”

Indeed, the firm was acting in the best interests of the scheme’s future pensioners,” he said. “Electra is quite rightly protecting the existing assets for those who are still members of the pension scheme.”

Since the trustees were paying out an enhanced pension package at their own discretion, the pensions regulator is not expected to intervene.

Electra was unavailable for comment.