AIB faces further talks over €1bn deficit
IRELAND - Negotiations between AIB and the Irish Bank Officials Association (IBOA) may be referred to the Labour Relations Commission (LRC), as AIB has proposed changes to its defined benefit (DB) scheme saw to help tackle a pension deficit exceeding €1bn.
Latest figures from AIB, which took advantage of the government's recapitalisation programme at the beginning of the year, showed the net pension deficit for all the pension schemes in the AIB Group was €1.11bn at the end of 2008, up from €423m in 2007.
Figures for Allied Irish Banks (AIB) plc - which does not include all elements of the business as a listed entity - showed the 2007 deficit of €253m for all the schemes, including UK and Ireland, had more than quadrupled to €1.04bn by the end of 2008.
It showed that although the value of the liabilities fell slightly from €3.1bn to €2.9bn, the total market value of the schemes' assets dropped by almost €1bn from €2.92bn to €1.94bn.
In addition the report noted the total contribution to the DB schemes, which closed to new members in 1997, are estimated to reach €122m in 2009, so AIB has proposed reforms to the DB schemes including changes to the calculation of the final salary and a new member contribution of around 5%.
Following opposition to the proposals from IBOA, regarding both pensions and other employee issues such as pay, the two parties have been conducting negotiations through Peter Cassells, independent chairman of the partnership steering group, to try and reach an agreement.
However, Cassells last week stated the existing talks would not be able to bring the differences to a "satisfactory conclusion", so he has recommended the parties "proceed immediately to the next stage of the negotiation procedures which involves conciliation at the Labour Relations Commission".
On the issue of pensions, Cassells said the AIB believes the scale of the deficit means it "must act with some urgency on this matter". However, IBOA's view is that pension issues are long-term and "do not necessarily require immediate action or warrant the actions proposed by the bank", and it has instead called for a separate consultation process.
Cassells has supported the union's point of view suggesting scheme members need to understand the issues, so argued "all relevant information should be set out to members of the DB pension scheme as a starting point to addressing the issues".
AIB confirmed it had updated its members of the pension scheme with the proposals for reform and the status of negotiations, but said while it believes the proposals it is making "are the right way" to make the scheme sustainable, they have not been finalised.
IBOA is meanwhile balloting members on the bank's final position, which it called "unacceptable and opportunistic", to gather support to reject the proposals and "pursue all outstanding issues through the LRC", and similar organisations in the UK.
If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email email@example.com