Córas Iompair Éireann’s (CIÉ's) pensions time bomb has been threatening to explode for some time now and the State-owned transport company has made clear that it is ready to push the big red button.
In its latest annual report, the company – which operates Iarnród Éireann, Bus Éireann and Dublin Bus – reported an overall pension deficit of €396.5 million last year, down from an eye-watering €853 million in 2021. The reduction was mostly due to “market movements” during the year, CIÉ said, but the remaining deficit is considered “a key component” of the group’s overall financial weakness.
CIÉ operates two pension schemes: one for frontline staff, covering 75 per cent of the workforce and another, set up in 1951, for employees with 40 years’ service, representing a quarter of the workforce. But while reforms to the former scheme were accepted by the workforce and ultimately implemented last year, reforming the 1951 scheme has remained a challenge.
Despite trade unions representing the 1951 workers agreeing to the changes following a Labour Court recommendation, the committee of the scheme has been slow to accept those reforms, even taking the company to the High Court over the matter last year.
[ CIÉ transport group signals it will implement changes to pension schemeOpens in new window ]
Now CIÉ is threatening to in effect pull the plug on the entire arrangement. In a slight change of tone, the company indicated in its latest report that it will consider closing the scheme to new entrants and “future accruals” if steps are not taken to address the issue. When asked, chief executive Lorcan O’Connor said he was unable to put a hard and fast timeline on the process. But he said: “Certainly, in the next few months, hard choices will have to be made.”
It remains to be seen whether this gambit will resolve the long-running dispute. The Irish Times reported in April 2021 that the Pensions Authority had warned it could wind up the scheme or reduce benefits unless steps were taken within weeks to address the deficit. Over two years later, the issue remains unresolved and CIÉ continues to have one of the biggest pension deficits in the State.
With the deficit costing the State-owned company as much as €112 million a year, how much longer can the Mexican standoff?
