Pensions for Road Transport Workers an
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Investment for Future Success
Says Andrew Seacombe
AHAULIER. to whom I was speaking last week looked at me aghast when I asked whether he had taken advantage of the pension scheme for the industry introduced last year. "Pension scheme?" he said. "Oh, I don't have anything like that!"
Only a few moments before he had been telling me with justifiable pride about the completion of his extensive new premises, obviously built at enormous cost. He had been displaying pride in the condition of his vehicles, and in the care that went into keeping them on the road. Wisely, he was investing surplus profits in improving his facilities.
Staff Forgotten
But in these elaborate plans for the future he had overlooked the most important single element for ensuring his continuing prosperity— the staff. Premises and vehicles are easily replaced. Good, loyal workers are not.
According to another, and more enlightened, haulier, the ignoring of staff welfare has for long been a basic fault in-the industry. Indeed, he went so far as to blame it, in part, for the nationalization of road haulage, and he took a knock at denationalization by suggesting that the Transport Act, 1953, has brought back conditions which were not conducive to the general success envisaged by the promoters of the pension scheme.
It is nearly a year since the pension scheme, devised for their members by the Road Haulage Association in conjunction with a panel of insurance brokers, was put into operation, but few operators have so far taken advantage of it.
Basically Sound
No valid criticism of the scheme emerged from an investigation that I have made among hauliers in the London area. Most of the people I interviewed did not consider it sufficiently attractive to retain employees, but they all agreed that it was basically sound. I was left with the general impression that the scheme in its present form was a good foundation on which to build.
I am sure that many of the larger hauliers throughout the country will agree with this, but it is important to remember that the architects of the scheme were limited by the fact that the cost of the basic benefits must be within the economic reach of the smaller operator. I think this has been generally achieved, with the important exception that many hauliers operating in a small way are running on such a low profit margin that they could not afford the scheme even if its cost were lower.
This observation may appear to be outside the scope of this article, but it is not inappropriate to point to .uneconomic rate-cutting as being partly responsible for the industry's bad reputation as an employer.
The scheme provides a pension for male workers retiring at the age of 65. Calculated at the rate of £3 for each year of service, the life pension of an employee joining the scheme at the age of 30 would be £105 a year. This benefit may, at the employer's option, be increased by an additional • pension for any previous service with the same employer.
Pension of £115 a Year
If, in the instance given, this man had had 10 years' past service, his pension could be increased by il for each of these years, making a total of £10. This would raise his retirement pension to £115 a year.
A death benefit of £300 is payable in the event of the employee dying during service and, in addition, the whole of the employee's contributions are refunded to his estate.
The employee's contribution for these benefits is 3s. a week. The employer's cost in the example given would be 1 Os. 10d. a year—or 19s. 2d. a month—representing only 2 per cent. of the employee's wage. The whole of the employer's cost is an allowable expense against income and profits tax.
In the event of the employee leaving his job and withdrawing from the scheme other than at retirement, the whole of his contributions are refunded to him. The surrender value payable to the employer is 90 per cent. of the pension contributions paid by him on the withdrawing employee's behalf_ The scheme, which is underwritten by the Yorkshire Insurance Co., Ltd..
is easy to understand and simple to administer. The insurance company provide all the necessary printed forms. One concern with 100 employees in the scheme estimated. that the additional work involved took up only about a half an hour a week of their wages clerk's time It follows, therefore, that to a haulier with fewer employees the extra work would be negligible.
An important point -is that the basic benefits of the scheme can be increased to suit the requirements of a particular concern. To one haulier in the East End of London it had come as a relief.
Treble Benefits
• Two years ago his chief fitter, who had served the company for some 30 years, was dangerously ill. Had the fitter died at that time, his employer would have been able to do little or nothing for his widow. The man recovered and is back at work. Now the employer has entered this man, together with the company's assistant manager, in the pension scheme at treble the basic benefits.
Contributions of 9s. a week are paid by these two employees, and their benefits, including that in the event of death before retiring, will be three times the basic figures I gave earlier. Their employer, who is acutely conscious of his responsibilities to these two particular members of his staff, has consequently been relieved of any worry about the future welfare of them or their dependants.
Pensions by Grace
The scheme is the answer, too, for those employers who, in the past, have rewarded loyal servants on their retirement with a small pension out of their own pockets. One such haulier told me that whenever possible in the past he had paid 10s. a week after retirement to employees who had given loyal service.
But be had had to be selective in this practice, because he had no fund built up to provide for this contingency. Now, not only is the cost per employee to be lower, but the future of all his workers is provided for.
The pensionable age was generally considered to be too high to be of value to the employer, a more realistic retirement age for drivers being 55. But a lowering in the age at which pensions become payable would make the scheme prohibitive, as even the slightest reduction in the qualifying age would have to be met With an increase in the premiums out of all proportion to the difference.
This is not a problem likely to be presented to the larger concerns, as they can invariably absorb retired " drivers in other aspects of their business. But it is one that militates against the introduction of the scheme by the small man.
Will the scheme help employers to attract and retain drivers? Not with the labour market as it is today, was the general opinion. In the words of two hauliers, drivers are "interested only in what they get in their wage packets."
Little Enthusiasm The independent nature of a driver's work is a factor which works against acceptance of the scheme by staff, according to another employer. He estimated that only a fifth of his workers were enthusiastic about it
He thought that many employees would regard the scheme merely as a form of savings bank. He gave me an instance of one of his best drivers who had used his refunded contributions from a pension scheme operated by a former employer—a C-licensee—to help to purchase a house. This employee was proud to admit that that was his object in participating in it. A general:application of the scheme for this purpose would obviously have the opposite effect to that intended.
The same haulier thought that, with the rising cost of living, the effectiveness of the scheme would he improved if it were possible to relate the benefits to the wages being received by participants when they reached retirement age.
Asking Too Much One man considered that many hauliers were expecting too much of the scheme. As an incentive to employment, it was useless in itself. It was of value in this connection only where it was accompanied by good wages and conditions.
For the past three years, all his staff had had a guaranteed 59-hour 51-day week. Before introducing the pension scheme he had circulated a questionnaire among his employees, and he was surprised at the " overwhelming response in its favour.
Indeed, contrary to the experience of another haulier, who told me that his workers did not "like to pay out for anything," this man was embarrassed by the number who, from the start, were anxious to pay more than the basic contribution.
His concern's annual labour turnover, incidentally, was as low .as 2 per cent. long before the pension scheme was instituted. Other hauliers to whom I spoke—and most of them displayed no interest in the scheme—had annual labour turnover figures ranging from 20 per cent. to 90 per cent.
A general improvement in the standards and conditions of employment is needed to attract younger men into the industry. In the past few years there has been a sub
stantial drop in the number of men of 29 years and under employed in road haulage.
According to Ministry of Labour figures, there were estimated to be 53,000 men in this age group working in the industry at the end of May, 1951. At a similar time last year there were only 43,000 men in the same category. The pension scheme is a positive step which should help to arrest this unhealthy trend.