BoI staff face vote on deal to tackle pensions deficit
BANK of Ireland (BoI) staff are to be balloted on a plan to deal with the €1.6bn deficit in its defined benefit pensions.
If staff accept the proposals, the bank will pump €750m into the schemes over five years, but there will be some limits on the salary levels that qualify for a pension.
Some 18,000 people are members of various BoI defined benefit schemes. This number includes those still contributing to the different schemes, pensioners and deferred members who have left the bank but have yet to retire.
Initial proposals had involved staff not retiring until the age of 68, capping pensionable pay as opposed to actual pay, and reducing the rate that pension benefits are built up.
Former head of Bank of Ireland Life Brian Forrester was asked to come up with proposals to plug the €1.6bn deficit.
The bank and the trade union member representing staff have agreed to preserve the defined benefit concept.
The bank will put an extra €750m into the schemes, in addition to the 15pc of salary already being contributed, if the new proposals are agreed.
Most of the members of the schemes are already contributing 2.5pc of salary, but those who are not will have to pay this amount in the future.
There will be a freeze on salary rises qualifying for pensionable salary from this year until April 2012.
It is proposed that the salary figure that qualifies for pension calculations will only rise by 4pc from April 2012.
But a "guaranteed pension underpin" means that pensionable salary will not fall below 85pc of what pensionable salary would have been had the cap not been applied.
Future pension payments will no longer rise in line with salary rises for the position people retired from. Instead, rises will be based on the inflation rate, with a maximum of 4pc, from April 2012.
There will be no pension increases for future pensioners for three years from the date of retirement. Existing pensioners, and deferred members, will have pension rises restricted to the consumer price index level, with a maximum of 4pc.
There will be no change in the retirement age or accrual rates, the bank will tell staff.