Finance minister Paschal Donohoe to meet unions as concern grows over scheme
The deficit in the pension fund covering thousands of credit union staff has ballooned.
Just weeks after the revelation that there is a €78m shortfall in the scheme it has now emerged that new calculations put the deficit at just short of €94m.
The deficiency rises to €109m if the hole is plugged over a 10-year period rather than this year, the Irish Independent has learned.
Revelations in this publication about the extent of the shortfall in the scheme came as a huge shock to staff hoping to benefit from it.
Finance Minister Paschal Donohoe has agreed to meet their unions, Siptu and the Financial Services Union, to discuss the pensions debacle.
The scheme is overseen by the Irish League of Credit Unions and covers staff in that organisation along with employees in affiliated credit unions.
The shortfall has ballooned from just €6m in 2017, but staff and league member credit unions say they were unaware until recently how large the deficit has become.
The size of the shortfall in the scheme emerged when the league’s board commissioned consultants PwC to review its finances.
It is so heavily in the red that PwC has recommended that from next month it should be closed off to new members, and no new pension benefits should accrue to existing staff, who will be switched to a different scheme.
It is understood there are around 1,000 serving employees paying into it, with another 1,000 scheme members made up of retired staff and those who have yet to retire but have moved jobs.
The scheme is a defined-benefit one, which means employees are promised a set pension based on their years of service and final salary.
Asked how the deficit has ballooned so much in just a few weeks, a spokesperson for the Irish League of Credit Unions said: “What is being reflected is the level of prudence which has been incorporated into the funding plans – this is deliberate, notwithstanding that the deficit at outset is higher.”
This means credit unions that are part of the scheme will have to pay higher contributions to plug the deficit, but it will reduce the risk of the deficit increasing further in the future.
The league insisted information on the state of the scheme is being provided to credit unions impacted despite claims by some credit unions that there is very little information coming to them.
It said the defined benefit scheme is a separate legal entity to the league and to credit unions.
It is a multi-employer defined benefit pension scheme, it said. Additional information is being provided to credit unions in response to requests that they have made which it is believed will substantially address the issues, the league said.
The spokesperson was asked if it was appropriate that the funds belonging to ordinary members of credit unions were being used to plug the pension deficit, as credit unions are owned by their members.
The league would only say that credit unions are well capitalised and prudentially managed.