ESB staff ballot for action to stop €600m dividend
STAFF at the ESB may try to block the semi-state from handing over as much as €600m in special payments to the Government over claims the company is refusing to support a group pension scheme.
Workers at ESB are to ballot for industrial action on November 18 over what they say are fears the company pension scheme could be left with a huge shortfall.
The action would be aimed in part at preventing ESB making dividend payments to the Government, including the proceeds from the sale of power stations in the UK and Spain being sold under the terms of the EU/IMF bailout, according to Brendan Ogle, secretary of the ESB group of unions.
Dividend payments should not be made because they are based on a "fiction", he said.
That was a reference to changes in 2010 to the way company accounts at ESB treat the group's pension.
ESB insists the pension scheme is able to meet all its payments as they fall due. But some staff fear the accounting change means they could face a pension shortfall down the line.
Brendan Ogle accused the Government of "asset stripping" the ESB by selling assets abroad at the same time as the firm is "washing its hands" of responsibility for the group pension.
But ESB management insists there is no pension crisis at the semi-state, that staff and workers agreed a pension rescue deal in 2010 and that the controversial change in how the pension liability is accounted for in annual accounts came only after that deal was agreed with unions and pensions trustees.
Last week, four ESB workers brought a legal challenge over what they say is the "wilful and deliberate" failure by the company to address the apparent deficit in their pension scheme. But that case is not expected to be heard until early next year.
In the meantime, staff fear the company's finances could be hurt because the Government has ordered the power company to come up with a €65m dividend this year, and a €400m special dividend early next year to be paid for from the sale of assets in the UK and Spain. The payments are in addition to the normal share of profits the company pays over every year.
Despite the threat of industrial action and heavy lobbying of Government, it is understood there are no formal talks underway between the company and the union.
The ESB has insisted its audited accounts properly reflect the company's financial position – including a fixed liability to the pension scheme as a result of the 2010 deal.
But the unions are concerned because of a gap in the pension scheme under the so-called "minimum funding standard".
It is a measure applied by the pension regulator to defined benefit pension schemes to see how they could cope in the future if they needed to be wound up.
Like most schemes, the ESB pension falls short when that standard is applied. However, the company has said that neither it nor the Government envisages the winding up of the scheme.