Pfizer pulls plug on pension reforms after union rejection

US pharma giant Pfizer has acknowledged failure in its efforts to persuade unions at its Ringaskiddy plant to accept pension reforms.

The unions at Ringaskiddy in Co Cork have decisively rejected a series of agreements brokered with the Workplace Relations Commission to switch from their current non-contributory final salary/defined benefit pension plan to a defined contribution pension scheme that would be less expensive for the company. The proposals had made provision for lump sum payments as well as an option for anyone over the age of 50 to continue in the final salary scheme – albeit making some contributions to their retirement.

Colleagues at the nearby Little Island plant, which has also opposed the changes for a number of years, had backed the most recent proposal.

The Pfizer workers are almost unique in the private sector in benefitting from final salary pensions to which they make no contributions. Final salary, or defined benefit, pensions promise to pay a set sum – normally two-thirds of final salary – in retirement for people with 40 years of service.

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Five years

In a statement on Tuesday, Pfizer said that, after five years of negotiations, “the company is extremely disappointed that union members in Ringaskiddy rejected the final WRC proposal” which, it said, provided for a pension plan that was “significantly above the market average”.

“The company is no longer looking to implement defined benefit pension changes across the Irish operations at this time,” Pfizer said.

“The issue of how to better manage the increasing costs, funding and volatility associated with defined benefit plans and ensure the competitiveness of our Irish operations remains a significant business challenge.”

Welcomed

Siptu welcomed the company decision. Organiser Alan O’Leary said the union had consistently urged the company to “continue to maintain our members existing benefits. We consistently advised the company that it was our strong view that maintaining good pension benefits for workers should be a top priority for all profitable multinational corporations,” he said.

About 1,000 Pfizer employees in Ireland are members of the defined benefit scheme. That includes about 200 at Little Island, 100 in Dublin and close to 700 at Ringaskiddy.

Siptu and Connect, the trade unions involved, represent about 250 of the staff at the Ringaskiddy active pharmaceutical ingredient plant – Pfizer’s first in Ireland back in 1969.

In relation to the Little Island site, which has been hived off by Pfizer as part of its Upjohn legacy medicines unit and is due to merge with generics company Mylan, the company said it recognised that staff had accepted the most recent pension proposal.

It said there may be separate discussions with staff at the plant on pension arrangements prior to it formally joining the new venture next year.