IRELAND – Negotiations over the closure of Allied Irish Banks' (AIB) defined benefit (DB) pension fund have been referred to Ireland's Labour Relations Commission (LRC), union IBOA has confirmed.
AIB, 99.8% owned by the National Pensions Reserve Fund following the country's banking crisis, announced plans in June to close its "prohibitively expensive" DB scheme and transition employees to a defined contribution (DC) arrangement.
A spokesman at the IBOA said the union was hopeful the referral to the LRC would result in a proposal that could address the bank's concerns "but also preserve the maximum possible benefits for our members".
"We've argued very strongly that the defined benefit scheme should be maintained as far as possible," he added.
He the bank was also proposing to change the existing DC arrangements for AIB employees in Northern Ireland and Great Britain in a way that would "disimprove the outcome for members".
"While we are prepared to acknowledge that some remedial action may be necessary, we don't believe the bank's proposals are appropriate, especially in light of the recent revelations about the extremely generous pensions arrangements in place for those senior executives who were responsible for the near collapse of the bank," he said.
The pension arrangements of former senior bank management has been the topic of some controversy in recent weeks, both in newspapers and the Dáil.
Following comments from the Taoiseach Enda Kenny, former chief executive Eugene Sheehy agreed to cut his annual pension from €300,000-320,000 to €250,000.
Alongside the closure of the DB fund, AIB is also laying off several thousand workers.
To allow for the funding of the redundancy programme, the company in August transferred a €1.1bn loan portfolio to the scheme – most recently reporting a €760m deficit.
According to the IBOA, the LRC may reach before the end of the year, but, as the matter concerns a number of issues beside the pension fund, it said it would prefer a well-considered decision over one made in haste.
Meanwhile, fellow union Mandate has warned that the wind-up of retailer Arnotts' underfunded DB scheme could result in a 50% loss of pension promises for its members.
The company earlier this year announced it would close its pension fund, which is reporting a €25m deficit according to most recent figures.
Mandate general secretary John Douglas noted that the wind-up order – granting pensions in payment absolute priority over actives and deferreds – would mean that around €100m of the fund's €150m in assets would be paid to pensioners, while the remaining funds would be divided among 600 active and deferred members.
"Based on current calculations, they will suffer a very significant 'haircut' to their pension promise, and our advisers estimate that this loss could be as much as 50%," he said.