Bechtel brain-drain fears as pension is wound up

Bechtel could lose its best staff as hundreds consider quitting following a shake-up in its pension regime.

Bechtel bosses have told staff its final salary pension scheme will shut on 31 July. Current plan members will then be invited to join a money-purchase scheme. The move has outraged long-term employees who are warning that the project manager faces a brain-drain from its high-profile contracts (see panel, right).

Insiders told CJ that many Bechtel workers were now considering going freelance because the pay was better.

One source said: "Agency rates have gone through the roof and senior staff and long-timers - who are earning half as much as freelance contractors - have only stayed here because of the benefits and the pension.

"But now they're thinking 'sod it, we're off'. The market is buoyant at the moment, they want to quit full-time and go to an agency or go elsewhere."

Staffers have warned a major walk-out could undermine the company's ability to perform on its major projects.

The source said: "What message does this send to the market? It could destroy the core competency of the organisation."

In an email to members of the fund, Bechtel's senior vice-president Michael Bailey explained the final salary scheme was being abandoned due to rising costs. He said a recent valuation showed the scheme's funding deficit had increased from a shortfall of £13.1m in 2004 to £33m.

He wrote: "In fact, over the last three years the investment returns have been extremely favourable, but the net result is a significant increase in the deficit."

Bechtel said all accrued pension benefits earned up to 31 July would be protected.

A Bechtel spokeswoman said there would be a 60-day consultation period with employees.

Bechtel's current UK major projects:

• £8.6bn upgrade of the West Coast Main Line.
• £7.5bn upgrade of London Underground Jubilee, Northern and Piccadilly lines.
• £16bn construction of Crossrail.