Pensioners sue Glanbia for breach of contract

A GROUP that includes many of its former managers plans to take food company Glanbia to the High Court in the latest round of a dispute over pension increases.

The former managers and technicians have been in dispute with the company since it stopped paying a 3.5 per cent increase to their pensions last January.

They say the annual increase was part of a deal agreed in the early 1990s, in return for sacrificing other benefits and pay increases while they were still working.

Yesterday, the pensioners confirmed they had begun High Court proceedings against Glanbia over the weekend. The company also confirmed it had received “notification of legal proceedings” from the retirees.

The pensioners are suing Glanbia for breach of contract. They say the company paid the increase until January of this year, when it stopped doing so.

A spokesman for them said the pensioners were particularly disappointed at the failure of Glanbia’s senior executives to honour the contract.

He claimed that when the company was in financial difficulty in the early 1990s they were the only workers who responded to a management plea for pay restraint.

“We agreed to accept lower salaries at the time, to ameliorate the company’s financial problems, in return for the security of better pension conditions on our retirement,” he said.

The average age of those involved is 72. Their spokesman said many of them would suffer serious loss of income as a result of the company’s action.

A statement from the pensioners’ group yesterday said the terms of the deal with them are included in a letter from the board of Waterford Foods – now part of Glanbia – to their trade union, the Dairy Executives’ Association.

The individuals involved were working for Waterford PLC when the deal was done. That organisation subsequently merged with Avonmore in the mid-1990s to form what is now Glanbia.

The company said yesterday its main defined-benefit scheme had a deficit of €200 million in 2010. As a result, it had reviewed the scheme in consultation with the trustees and the unions.

“This review ultimately resulted in the group receiving approval from the Pensions Board for a revised funding proposal,” Glanbia said.

“This was achieved through a combination of benefit reductions to pensioners, deferred members and active employees, as well as a significant increase in the employer contribution.”

Glanbia’s main defined-benefit scheme has about 2,600 members. Of those, 903 are active, 736 are pensioners and 1,015 are deferred.

The two sides have been in dispute over the increase since January. The pensioners involved picketed Glanbia’s annual general meeting in Kilkenny in May.

Glanbia is best known to Irish people through its Avonmore milk brand. The group has operations in Ireland, continental Europe, the Americas, Africa and the Far East. Last year it made an operating profit of €167 million on €2.7 billion of sales.