Sunday 4 December 2016

Employees to boost pension pot despite drop in deficit

Loans given to SMEs under recapitalisation

Joe Brennan

Published 03/03/2010 | 05:00

AIB's pension deficit almost halved over the last six months of the year to €714m, though the group is forging ahead with plans to make members of its defined benefit scheme start making contributions from next month.

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The IBOA finance union is currently balloting AIB staff on the group's plans to get members of its defined benefit scheme to start making contributions from next month. Defined benefit pensions entitle beneficiaries to a retirement income of two-thirds of final salary.

The bank aims to get working members of the scheme to contribute 4pc of their annual salary into the pension pot from April, rising to 5pc next year.

Banks are coming under massive pressure to sort out shortfalls in their defined benefit schemes, after the influential Basel Committee on banking supervision proposed recently that pension deficits should be deducted from lenders' all-important equity capital.

Separately, AIB said its commitment to increase its lending capacity to small- to medium-sized enterprises (SMEs) by €1.3bn under its €3.5bn state recapitalisation was surpassed -- as it provided €2.5bn of loans to the sector.

While gross loans across the group decreased 3pc last year, AIB increased its Irish lending by 1pc. The bank has a 42pc share of the Irish SME market.

AIB managing director Colm Doherty said that AIB wrote 40pc of all new mortgages in Ireland last year. The bank also committed under its recapitalisation deal last year to increase capacity to the market by 30pc.

"We actually increased that by 36pc in value and 50pc in volume," he said.

Irish Independent

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