Staff voting on AIB pension plans
FINANCE union the IBOA has started balloting Allied Irish Banks (AIB) staff on the group’s plans to get members of its defined benefit scheme to start making contributions to help tackle its €1.26bn deficit.
Working members of AIB’s defined benefit scheme are being asked to stump up 4pc of their annual salary from April this year, rising to 5pc next year, under recommendations drawn up last year by independent mediator Kevin Foley.
Staff that joined the bank before 1998 are part of the scheme and do not currently make any contributions toward their retirement.
Pension pools across the globe have been hit by massive shortfalls – as investment returns tumbled in recent years amid the global economic downturn.
Retirement schemes have also been struggling with structural problems as life expectancies continue to improve. The issue has become all the more pressing for banks, after the influential Basel Committee on Banking Supervision proposed recently that pension deficits should be deducted from lenders’ all-important core equity capital.
Meetings AIB will be hoping to have the issue cleared up before it unveils its full-year 2008 figures early next month. The IBOA has started holding meetings with AIB workers around the country on the issue, starting in Cork on Monday and finishing up in Tralee, Co Kerry, on February 24.
Separately, Bank of Ireland also initiated a review of its defined pension scheme, which is under water to the tune of €1.5bn. Staff members of the plan – which was closed to new entrants in 2007 – have been left with little doubt that they will have to up their contributions from 2.5pc to help address the shortfall.
Analysts say that the move by both banks to address their pension issues will see them receive a better hearing from investors as they go about raising billions of euro over the coming months to shore up their balance sheets.