ABOUT 7,000 staff will be affected by Ulster Bank’s plans to cut back on the benefits to staff in its final-salary pension scheme, close its defined benefit pension scheme and freeze pay this year.
The bank has announced that it plans to cap the annual increase in employees’ pensionable pay by 2 per cent or the rate of inflation, whichever is the lower. This will mean that, even if staff receive large pay increases or promotions, only a maximum 2 per cent increase would be used when calculating their pension.
Ulster Bank also intends to close the company’s defined benefit scheme, in which employees who retire receive a set percentage of their final salary, to new staff members from November 1st. The bank is also freezing pay for all staff for 2009.
The changes were announced in line with similar measured introduced by the bank’s parent company, Royal Bank of Scotland (RBS), which is 70 per cent-owned by the UK government.
Ulster Bank said that it was introducing the changes “in light of the current economic situation and to control the cost and future liabilities to the group”.
The bank will enter a period of discussion with union representatives of employees, the company said in a statement.
The Irish Bank Officials’ Association (IBOA) rejected the bank’s proposals, saying that its members in the bank were being “severely punished for the profligate lending policies of senior management in both Ulster Bank and RBS”.
“Despite the huge contributions and sacrifices of members throughout the country, once again staff are being asked to bear the brunt of this mismanagement,” said IBOA general secretary Larry Broderick.
The union said that the proposals had come as a huge surprise as the bank had advised as recently as Monday that it was “committed to entering a conciliation process on pay at the start of September”.
Rejecting the pay freeze, the IBOA said that Ulster Bank were “being discriminated against” as RBS staff had received payment for a profit share of 10 per cent and a cost of living increase for 2009 despite the bank recording a loss of £24 billion.
The union said that it plans to ballot members in the coming days and will ask independent conciliator Kieran Mulvey, who will meet the bank and union on September 2nd, to deal with the matter.
Ulster Bank has embarked on a range of cost-cutting measures as the bank’s losses have spiralled due to bad loans primarily to developers as a result of the collapse in the property market.
The bank said last month that it would be seeking a further 250 redundancies in addition to the 750 job losses announced at the start of this year with the closure of mortgage lender First Active and its merger with Ulster Bank.
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