Business Irish

Tuesday 19 June 2018

Pfizer staff set for €35k pension row payout

If the terms of the Labour Court recommendation are accepted by workers across four sites, Pfizer could face a maximum bill of around €31.5m to fund the lump sum payments
If the terms of the Labour Court recommendation are accepted by workers across four sites, Pfizer could face a maximum bill of around €31.5m to fund the lump sum payments

Gordon Deegan

The Labour Court has recommended that drug giant Pfizer's 900-strong workforce each receive lump payments of up to €35,000 to compensate for it freezing its defined benefit pension schemes.

The court has made its comprehensive recommendation on the long-running dispute between the US drug giant and Siptu and the Technical, Engineering and Electrical Union (TEEU).

If the terms of the Labour Court recommendation are accepted by workers across four sites, Pfizer could face a maximum bill of around €31.5m to fund the lump sum payments.

In its recommendation, the Labour Court has recommended that an initial lump sum payment of €10,000 each be made after June 30 where workers would have the option of receiving the payment through payroll or to their pensions where it would be tax-free.

The Labour Court is also recommending that an additional lump payment be made of €1,700 per year's service to a maximum of €25,000 and that would be paid to the workers' Defined Contribution Scheme.

The proposal by Pfizer to freeze its defined benefit scheme has been strongly resisted by unions over the past four years since the plan was first proposed in 2014.

In their arguments before the Labour Court, Siptu and the TEEU said that they are not agreeable to any changes to the current DB Pension Scheme.

The unions claimed that the pension scheme is an integral part of the company union agreement and of the terms and conditions of its members. 

In response, Pfizer said the change is necessary "to address the unsustainable cost and exposure to highly volatile discount rates associated with DB plans, which impact negatively on both the financial health of Pfizer Inc but also on the cost competitiveness of Irish operations".

Pfizer said the cost to the company of funding the Defined Benefit schemes "has risen 1000pc since 2009".

A spokeswoman for Pfizer said the Defined Contribution Scheme proposed to replace the DB Scheme "is above market average, with very attractive transition incentives and with strong contributions from the company".

She said that the court's recommendation "supports moving away from the DB Schemes but includes recommendations for enhanced terms and transitional arrangements compared to previous proposals". 

"The company is reviewing and considering the recommendation of the court," she said.

A Siptu spokesman said its Pfizer members are currently availing of actuarial advice on the recommendation.

He said until members fully consider the recommendation, the union will not be commenting any further.

Irish Independent

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