Arnotts pensions 'down 50pc' if scheme wound up
ARNOTTS staff will get half of the income they could have expected in retirement under plans to wind up the pension scheme, trade unions have said.
The Mandate trade union also claimed the winding up of the scheme was pre-emptive, and there are alternatives to shutting it down.
General secretary of the union John Douglas said the current pension scheme for Arnotts has a deficit of €25m.
This is because its assets of €125m are less than it will need to pay out to retiring workers.
Mr Douglas said that Arnotts – which is controlled by its creditor banks – has advised Mandate that they are not in a position to fund the €25m deficit from a lump sum, or increased pension contributions.
This means a proposal to wind-up the scheme will be considered at a trustees' meeting on December 7 next.
Winding up the scheme will mean the assets of the scheme would be realised to secure the pensions of the 300 people currently on pensions. This is likely to cost around €100m.
The remaining assets would then be divided between the 300 current staff and 300 former employees in the scheme to calculate a transfer value.
"Based on current calculations, they will suffer a very significant 'haircut' to their pension promise. This loss could be as much as 50pc," he said.
Mr Douglas said the union's pension advisers believe that winding-up the Arnotts' pension scheme at this time is the worst possible option for current staff and deferred pensioners.
He said that he has explained to Arnotts and their creditor banks that their proposed actions are pre-emptive – and that alternatives are available which could help current and former staff get a better deal.
Arnotts chief executive Nigel Blow responded that management of Arnotts advised the trustees of the pension fund that the company could no longer fund the level of payments that would be required to meet the future obligations of the fund as projected.