The State-owned CIÉ transport group has signalled that it is moving to implement proposed changes to the pension scheme that covers managerial and administrative grades which is facing a deficit of more than €500 million.
In a letter on Thursday to the committee and trustees of what is known as the 1951 CIÉ Superannuation Scheme the group said the changes should bring it into compliance with the minimum funding standard requirements of the Pensions Act 1990.
The group said it had notified the Minister for Transport, Eamon Ryan, that it was commencing the statutory process to implement the changes to the scheme as recommended by the Labour Court.
The Labour Court proposals were accepted by trade union members at the companies in the group – Irish Rail, Dublin Bus and Bus Éireann – by 56 per cent to 44 per cent in a ballot in early May.
The group believes the so-called 1951 scheme in the transport group is facing a deficit of about €550 million.
The Pensions Committee had indicated that it would seek a High Court directions as to whether the company should carry the entire liability for the deficit based on arrangements dating from 1994 when a number of company schemes were amalgamated.
Some staff members have contended that the €550 million figure is a notional or technical deficit and that the 1951 scheme is 98per cent funded. Some also argue that company should be responsible for dealing with any funding gap rather than members having benefits reduced.
The Irish Times reported in April that the Pensions Authority had warned it could wind up the scheme or reduce benefits, unless steps were taken within the next few weeks to address the deficit.
The 1951 scheme at CIÉ is a defined-benefit arrangement and, based on 40 years’ service, the pension payment involves 50 per cent of final salary and a lump sum of 1½ years’ pay. Members can retire at 60, although they can continue to accrue service up to age 66. The actual average age of retirement is 63.5 years.
At present the employer contributes about 28 per cent and the employee about 8 per cent.
Under the Labour Court proposals, the new minimum age of retirement for those under age 60 at present would be 63 years.
Those wishing to retire prior to 63 could do so, however, by paying a contribution from their lump sum. Their pension in such circumstances would not be discounted.
The scheme would remain open to new entrants but pensions would be based on career average earnings.
The CIÉ group would contribute a minimum of €320 million over the 10-year funding proposal.