CIÉ pensions committee seek court ruling on moves to secure solvency
Posted on 12th October 2021 at 20:44
As of last December, the scheme’s funding deficit was €151m, according to CIÉ
Members of the committee of one of the two principal CIÉ pension schemes want the High Court to determine whether the company’s moves to secure the solvency of the scheme is compatible with reductions in benefits to members.
The superannuation scheme covers principally supervisory, technical, administrative and managerial staff, and the proposed changes include increasing the minimum retirement age from 60 to 63.
The scheme, set up in 1951, was fully funded to the relevant statutory standard until 2008 when it was in deficit. After that, a funding proposal was devised but by 2017 it was off-track again.
As of last December, the scheme’s funding deficit was €151 million, according to CIÉ.
The Pensions Authority told the scheme’s trustees and pensions committee it was considering using a provision under law to reduce benefits under the scheme because of the solvency position or to wind it up.
Negotiations followed between CIÉ and the group of trade unions in the company and ultimately the Labour Court issued a recommendation that member benefit reductions should be achieved by increasing the pension age. The unions voted to accept it by 54 per cent to 46 per cent.
The CIÉ board informed the pension committee it had notified the Minister for Transport and the Pensions Authority that it had commenced a statutory process to implement changes to the scheme to bring it in compliance with minimum funding standard requirements of the Pensions Act 1990 and that, therefore, a funding proposal will not be required.
The committee says, however, no draft amending scheme was attached and it (the committee) is not clear what changes CIÉ is proposing to make. To date, it says, no such amendments have been published or provided to it, it says.
The committee believes any proposal to reduce member benefits is incompatible with CIÉ’s obligations under the scheme’s rules.
It has asked the High Court to determine if the obligation under Rule 20 of the 1951 scheme, to maintain and support its solvency, satisfies the statutory funding standard. It also wants a ruling on whether there is an obligation under the rule to support the scheme in accordance with the Labour Court recommendation.
CIÉ says, among other things, the committee’s motivation in bringing the legal proceedings is due to a perceived failure by the Pensions Authority to offer what is says is “comfort” to the committee and to persuade the authority against exercising its powers under the Pensions Act.
It believes the benefits available to members will remain generous by reference to corresponding benefits in other public sector schemes.
In an affidavit, Aidan Grogan, head of CIÉ group human resources and organisational development, points to schemes in companies like An Post, Bord Gáis, RTÉ, the Dublin Airport Authority and Bord na Mona. Most have introduced defined benefit pension schemes with even higher retirement ages.
The proposed change will align retirement age with the actual current experience within the scheme (where the average retirement is around 63.44) and will relieve the significant burden of having to hold reserves based on the age of 60, he says.
CIÉ believes that, having concluded complex and difficult industrial negotiations, the changes are being “essentially frustrated by obstruction of a straightforward step” involving a submission to the Pensions Authority of a funding proposal, he says.
The case was admitted to the fast-track Commercial Court by Mr Justice Denis McDonald on the application of Kelley Smith SC, for the pensions committee. It was opposed by Úna Tighe SC, for CIÉ, on grounds including delay in bringing the case.
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