Kraft Tells Cadbury Staff: Pension or Pay Raises

The Financial Times reports that Kraft Foods discovered an obscure clause in Cadbury’s pension trust deed after it acquired Cadbury for £11.6 billion ($17.6 billion). The trust deed clause, which is at least 30 years old, prevents Kraft from changing benefits to members in any way that is “unfair or materially detrimental” in the opinion of the scheme actuary, according to the news report.  

In addition, Kraft has decided workers wishing to remain in the defined benefit scheme, which has 30,000 members, will see their contributions rise from 5% to 9% over the next four years. Cadbury closed its final salary scheme to new members in 2001 and replaced it with an average salary scheme, but the majority of Cadbury’s long-serving staff remain in the final salary scheme.