Pensioners of former FTSE 100 brewing group, Scottish & Newcastle PLC (‘S&N’) have written to the Chairman of the Business, Innovation and Skills Select Committee asking him to investigate the failure of Heineken to fulfil undertakings given to S&N pensioners before its takeover of S&N in 2008.

At the EGM to approve the acquisition of S&N it was stated that; “…..there is a practice of providing discretionary pension increases each year….it is Heineken’s intention to continue this practice.”  This commitment relates to pensions built up in the scheme before 6 April 1997. In 2010 pensioners were advised that there would be no increase on pre-1997 pensions.  No reasons have been given for Heineken’s decision.

The public undertaking given by Heineken during the final stages of the S&N takeover in March 2008 said two things; firstly, that the takeover would not affect the benefits of pensioners and secondly, it was Heineken’s intention to continue with S&N’s practice – followed since 1970 – of providing discretionary increases on pensions in line with inflation.  Heineken also advised the pension trustees and the Board of S&N that Heineken NV understood the position of the pension fund and stood behind this commitment. The undertaking was relied upon, and was intended to be relied upon, by members of the pension scheme when deciding how to select their benefits on retirement.

Heineken now say that they never meant that they intended to continue to provide increases, only that the company would let S&N Ltd (the UK business) decide each year whether or not to do so without any direction from Heineken. It is this volte face that the pensioners wish the Select Committee to investigate. The pensioners’ frustration is compounded by the fact that there has been no consultation or explanation by either Heineken or the Trustee of the Pension Plan.  Nor has there been any clarification of Heineken’s future intentions or explanation as to how future decisions will be taken.

Separately S&N pensioners were told by the Trustee that the S&N Pension plan had a much bigger deficit than when Heineken took over.  The decision not to pay the discretionary increases leaves S&N pensioners paying for this deficit rather than Heineken NV. The company’s contribution to the deficit will depend on the profitability of Heineken UK Ltd and this company is only part of the business which Heineken acquired in 2008 which in itself was only part of the entire S&N Group.   Before the deal the S&N Group stood behind the pension fund. Heineken NV is refusing to take the same position despite its commitments.

Tom Ward, former S&N Corporate Development Director and spokesperson for the group representing S&N pensioners, explains further:  “Before the takeover we understood that Heineken NV, the parent company, stood firmly behind their public and private commitments on pensions.  Given the standing, size and reputation of Heineken, that gave us great comfort.  To now make a U-turn on their very public undertaking to follow S&N’s many decades of company practice in applying inflationary increases to pensions is deeply offensive. This is a major issue for pensioners; we have been given a raw deal and treated unfairly and dishonourably.  The continuation of this decision will lead to the rapid devaluation of pensions and potential hardship for many thousands of loyal employees who worked hard to build S&N into the business that was so attractive to Heineken.

At a time when there is understandable concern about the high-handedness of major multinationals after they have taken over important historic UK businesses, we believe that it is important that the Select Committee investigates the behaviour of Heineken.” The S&N Pensions Group, which is lobbying the Committee, has been formed to try to provide many thousands of pensioners with relevant information and to try to defend their interests. The Group was created in response to the decision by Heineken not to pay any discretionary increase in pensions in 2010.