IRELAND - The Irish Labour Court has backed the proposal of an optional hybrid pension scheme as a solution to the dispute between RTÉ and the RTÉ Trade Union Group (TUG) on pension provision.

Although the full ruling is currently restricted to the parties involved, RTÉ - the Irish public service broadcaster -revealed the Labour Court proposed the first €48,000 of an employee's salary should be subject to a guaranteed defined benefit (DB) scheme that could provide up to 50% of final salary.

However, any salary earned above €48,000 would be subject to a defined contribution (DC) scheme, although the Labour Court recommended the figure of €48,000 should be increased in line with either national wage agreements or the percentage increase in basic pay within the RTÉ group.

The recommendation from the Labour Court follows an ongoing dispute between RTÉ and the TUG over the last 10 years, in which the union claimed the 1,280 DC members  have been subjected to a "flawed" and "unjust" scheme in which employees are required to take on all the risk of investment returns and have no guarantee of a final pension.

In March this year, representatives from the TUG told the Irish joint committee on communications members were prepared to strike over the issue as although both parties had nominally agreed to a hybrid scheme, RTÉ had proposed a salary cap of €35,000 - including the state pension - which the unions claimed was too low.

The issue was referred to the National Implementation Board (NIB) and in turn it referred the matter to the Labour Court which has recommended increasing the capped salary for the DB scheme by an additional €13,000.

In addition, RTÉ had previously proposed contributing a lump sum of €3.75m to the existing DC scheme - towards the underfunding - but the Labour Court ruled that this should be increased to €5m and should be spread between both the existing DC scheme and the DC element of the hybrid scheme.

RTÉ confirmed under the proposal it will retain both its existing DB and DC schemes, while it revealed the Labour Court had also recommended the common funding rate - level of contribution - for the hybrid scheme should be increased to 8.75%.

In response to the ruling the RTÉ Executive said it had noted the Labour Court's recommendations and "will carefully consider them over the coming weeks in the context of maintaining its commitments to the audience; the significant financial implications in the current economic climate and the awareness of the very good employment conditions of RTÉ employees".

The Executive confirmed it would report to the RTÉ Authority - appointed by the government to oversee the RTÉ group - at a meeting on July 17 2008, after which the group' would announce its formal position.

Figures from RTÉ's latest annual report for 2007 revealed the group's DB pension scheme - which has over 600 members - had assets of €996.7m as of December 31 2008, and it reported an actuarial surplus of €41.2m on January 1 2008, and an accounting surplus - based on IAS19 - of €17.5m at the end of December 2007.

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