NATIONAL IRISH Bank (NIB) is set to become the third Irish bank to close its defined benefit pension scheme to new employees. From next August 1st, the bank will replace its guaranteed scheme with a new hybrid pension plan.
The decision follows a recommendation from the Labour Relations Commission (LRC), which was enlisted to review the firm’s pension arrangements as part of an agreement known as “Sharing Success”, which was made in 2007 between the bank and IBOA, the finance union.
The new hybrid scheme comprises two elements – a cash balance plan and an investment account plan – and aims to deliver a pension of 64 per cent of final salary in addition to the social welfare State pension at age 65. All new employees will be automatically entered into the hybrid plan and will contribute 5 per cent of salary to the cash balance account.
The hybrid scheme is less attractive than the defined benefit plan which delivers guaranteed returns. The figure of 64 per cent of final salary is based on 45 working years with the bank and is dependent on a number of factors.
