Pension dispute at state broadcasting company influenced by bank deal

Trade unions at the country’s state broadcaster, Radio Telefís Éireann, are seeking a re-hearing of their case for a new defined benefit pension scheme. The appeal follows a recent recommendation with respect to one of Ireland’s largest banks, Allied Irish Banks, which backed an attractive new ‘hybrid’ pension plan.

Pensions have emerged as a key issue for the social partners at national level, as reflected by a number of important cases in both the private and public sectors within the past year or two. The latest dispute involves the state-owned broadcaster, Radio Telefís Éireann (RTÉ). Following a recent mediation process, trade unions at RTÉ are seeking a re-hearing of the case which they made late last year to their own internal dispute resolution body, the RTÉ Industrial Relations Tribunal (IRT). The unions involved are the National Union of Journalists (NUJ) and the Services, Industrial, Professional and Technical Union (SIPTU), along with a number of smaller craft unions.

Pension demands

The trade unions are demanding the re-introduction of a defined benefit (DB) pension scheme for RTÉ workers who have been on a defined contribution (DC) scheme since 1989. Workers who were on the original DB scheme before that time are not involved in the dispute.

DB plans provide members with benefits on retirement or death based on the member’s salary close to retirement and on their pensionable service. Many DB plans are integrated with the state pension. DC plans, on the other hand, provide benefits based on the value of the member’s individual retirement account at the time a benefit is purchased. The value of a DC plan depends on three main factors: the contributions paid into the account; the investment returns on those contributions; and the cost of purchasing the member’s pension using annuity rates.

The trade unions have already rejected a detailed set of recommendations on the dispute issued by the IRT. These included the proposal to improve the existing DC scheme.

Pension ‘hybrid’ scheme proposed for bank

The local NUJ branch is demanding a DB limit that would be at least as attractive as the level proposed in a recent recommendation concerning Allied Irish Banks (AIB) and the Irish Bank Officials’ Association (IBOA) (IE0705049I). A special independent tribunal proposed that the bank would introduce a new hybrid pension scheme for staff who only had access to a DC scheme since 1997. The proposed new scheme will result in a combined DB/DC scheme; the most significant feature of this scheme is the fact that a DB element will apply up to a salary limit of €61,997 (the assistant manager pay range).

AIB employees who have been on a DB plan since before 1997 will not be affected by the new scheme. Beyond the proposed DB salary limit, the scheme would operate as a DC scheme – hence the description ‘hybrid’ for such schemes, which are becoming increasingly common across the Irish economy.

Employer’s response

RTE management has told the trade unions that their pension demands are unrealistic in an RTE context. Even if it wanted to meet their demands, management informed the unions that the company would be unable to secure permission from the Department of Finance, which has taken a strong line on possible changes in pension schemes across the public sector.

Commentary

Observers are of the view that the AIB case, which involved one of Ireland’s top banks, was bound to set a precedent for other organisations. Other hybrid schemes that have been agreed on in recent times include high-profile companies such as Irish Life and Permanent, Glanbia and C&C.

Meanwhile, in relation to the Bank of Ireland, the country’s other largest bank, an ‘intense process of engagement’ proposed by the Labour Court earlier this year is underway at the Labour Relations Commission (LRC). These negotiations aim to resolve a dispute over the bank’s decision to introduce a hybrid scheme for new staff only, the terms of which IBOA wants to see improved.

Brian Sheehan, IRN Publishing