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Honda is trying to raise the retirement age for workers at its British plant in Swindon, Wiltshire, from 60 to 62 in an effort to stave off a financial crisis in its stricken pension fund, The Times newspaper reported on Friday.

The newspaper said that Honda, which builds the Civic hatchback and CR-V SUV at the plant, is thought to be the first major employer in Britain to try to raise the age at which workers are eligible for retirement. Honda has also begun its first pay talks with unions since it began making cars in Britain 17 years ago, The Times added.

According to the newspaper, Honda wants to raise the retirement age to boost its pension fund which has a deficit of more than £40 million and the company is also closing its final salary pension scheme to new entrants — at least for the next five years — and is calling for employees to increase their pension contributions.

The Times said Honda also wants to impose a 2.2% pay rise on staff at a time when many companies in the sector are agreeing pay deals above inflation.

The Times noted that Honda firm was forced into a new round of pay talks with unions after agreeing a recognition deal with Amicus, the largest private-sector union, earlier this year. A previous deal, which included a no-strike clause and fewer negotiating rights, was torn up by Derek Simpson, the new joint general secretary of Amicus, in a purge on so-called “sweetheart deals” when he defeated his predecessor, Sir Ken Jackson, the newspaper added.

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According to The Times, Simpson said that Honda’s 4,000 workers at its Swindon plant should reject the plans.

The Times said Honda has written to its staff asking them to sign new contracts to enable the leaving age to be raised by two years, though staff aged over 55 will not be affected and the car maker has said that it will put £10.2 million into the pension fund and increase company contributions by more than 2% to 9.5% while asking employees to raise contributions half a percent to 5.5%.

Amicus argues that increased pension contributions amount to a pay cut for employees, The Times said, given that the overall pay offer is below inflation.

The Times also reported that Honda faces confrontation with its workforce over its insistence that selective merit awards should remain part of the pay package. It wants to give a 2.2% pay increase, with a further 0.5% available for merit awards.

Amicus objects to this because it believes the extra money should be shared among everyone, the Times noted, adding that Amicus regional secretary Jim d’Avila said: “This is a poor offer compared with settlements which have been reached at Jaguar, Land Rover and BMW.”

Amicus recently settled a dispute with the British operations of the PSA Citroen Group over the amount contributed by 206 assembly plant workers to their pension fund.