IRELAND - The Bank of Ireland has proposed changes to its defined benefit (DB) scheme that it claims could halve the €1.6bn accounting deficit in the scheme.
Following a review and consultation process, including a recommendation from independent third party mediator Mark Connaughton, the proposed changes have been accepted by the Irish Bank Officials Association (IBOA) trade union, partly on the basis it will allow the bank's DB scheme to continue.
The proposed changes to the BoI Staff Pension Fund (BSPF) include:
BOA noted the recommendation also proposes a review of the scheme every three years, with the union stating that if the fund is in surplus it reserves the right to claim for enhanced member benefits. (See earlier IPE article: Bank of Ireland reviews DB scheme over €1.5bn deficit)
BoI announced the proposals "involve members agreeing to some changes to the schemes, primarily involving future pension increases and how future salary increases qualify for pension which together would eliminate approximately 50% of the 31 December 2009 IAS 19 deficit". This was reported as €1.6bn in the 2009 preliminary figures. (See earlier IPE article: NPRF may have to further subsidise AIB)
It added: "If such proposals are agreed, the Bank and its subsidiaries will increase their cash contributions, above existing cash contributions, to the schemes so as to eliminate the 50% balance of the 31 December 2009 IAS 19 deficit over approximately six years".
The bank, which is partly owned by the National Pension Reserve Fund (NPRF) following the government's recapitalisation programme last year, claimed these changes would be "income positive" for the group. (See earlier IPE articles: NPRF contributions to fund €7bn banking rescue and NPRF could not 'justify' bank recapitalisation)
In response to the proposals, Gerry Hanna, senior industrial relations officer at IBOA, recommended in a memo to members that they vote in support of the proposals. He argued they should do so "since it does not seek to fundamentally amend existing pension benefits or contributions and also ensures the continuation of the DB scheme in Bank of Ireland".
The agreement on the pension changes follows the discovery earlier this year of a special clause in the trustee deed and rules that means the scheme cannot be discontinued without the consent of at least 75% of members. (See earlier IPE article: Irish roundup: Bank of Ireland, AIB)
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