Saturday 23 September 2017

AIB in talks with unions in latest bid to tackle pension deficit

Donal O'Donovan

Donal O'Donovan

STATE-owned AIB bank is locked in talks with unions over a looming crisis in its defined benefit pensions scheme, just months after the controversy over a €1.1bn bailout of the bank's retirement pot with taxpayer assets.

It follows news that Bank of Ireland has engaged with its staff with a view to negotiating a deal to plug its €1.1bn pension deficit.

At AIB, talks between management and unions on the issue are being chaired by the Labour Relations Commission (LRC), the Irish Independent has learned.

It's the second time in four years the two sides have had to hammer out a new pensions deal. In 2009, staff at AIB agreed to a 20pc cut in payments and an increase in employee contributions.

The pension deficit did fall from €1.2bn at the end of 2009 to €277m by the middle of 2011 as a result of the changes, but the effect was short-lived. By last summer, the deficit had surged back to €1.46bn when the bank announced results for the first half of 2012, and is understood to have moved significantly since then.

Updated figures are due to be published alongside the bank's financial results for 2012 on March 27. Sources close to both sides say tackling the pension issue is now the major industrial relations issue at the bank, which last year announced 2,500 jobs cuts.

It comes as the Government prepares to release the findings of a review by consultants Mercer of pay across the banks this week.

There is widespread speculation that ministers will seek pay cuts at the bailed-out banks when the findings of the review are made public.

However, any recommendation of pay cuts for bank staff following the review will be resisted, according to Larry Broderick of the Irish Bank Officials Union (left).

Last year, AIB agreed to hand assets with a face value of €1.1bn to trustees of the bank's pension scheme.

The deal propped up the scheme so that it could cope with the cost implications of the bank's redundancy and early retirement programme.

The move proved controversial because former bank executives – including some of those at the helm in the run-up to the bank's nationalisation and who receive six-figure pensions – were among those to benefit from the transfer.

The controversial asset transfer deal helped bolster the AIB pension pot but did not tackle the underlying deficit, according to sources at the bank.

Irish Independent

Also in Business