Saturday 21 April 2018

Pfizer battles to close Irish pension scheme as 'not fit for purpose'

Siptu argues that the defined benefit scheme is fully funded. Photo: Bloomberg
Siptu argues that the defined benefit scheme is fully funded. Photo: Bloomberg

Gordon Deegan

SIPTU is resisting attempts by Viagra producer Pfizer to shut down its gilt-edged Defined Benefit (DB) Pension Scheme for 1,000 employees here.

The drug producer has made the move after describing its DB scheme as "unsustainable" and "not fit for purpose".

The firm told the Labour Court that over the last five years it fully paid for the pension levy for DB members, representing a total additional cost of €10m to the firm.

Pfizer employs 3,200 people in Ireland with 2,200 already on its DB schemes.

The US firm is now seeking to move its remaining 1,000 employees based at its Ringaskiddy and Little Island operations in Cork along with those employed in the firm's Global Financial Services and Sales and Commercial divisions to the Defined Contribution Scheme.

The dispute between Siptu and Pfizer has reached the Labour Court after the two sides could not resolve the dispute at local level.

A spokeswoman for Pfizer confirmed yesterday that it is proposing to close its employee non-contributory defined benefit pension schemes from 2018.

She said that "this change is part of a global initiative as the environment for DB plans has become very challenging due to the increasing cost and volatility of these types of pension plans".

She added: "In Ireland, the cost to the company of funding these non-contributory schemes has tripled between 2012 and 2014 and these increases are not sustainable."

The spokeswoman stressed that the proposal does not affect deferred members or pensioners.

However, Siptu has outlined its opposition to the move and before the Labour Court stated that the DB scheme "is in a healthy position and it is not in deficit". Siptu also told the court that the DB scheme is a fundamental part of the workers' terms and conditions and is contained in the union management collective agreements.

The union argued that the rationale for changing the DB scheme has nothing to do with its current funding status.

However, in reply, Pfizer stated that it views its DB plans "as unsustainable, not fit for purpose and a historical anachronism which places unreasonable costs and the sole risk burden on the employer."

Siptu organiser Paul Depuis said yesterday that "there is no stomach from the members to move from the Defined Benefit Scheme to the Defined Contribution Scheme at this current time".

He added: "The DB scheme is fully funded and it is just part of the corporate wish list to seek to move from a DB scheme to a DC scheme."

Mr Depuis said that a move to a DC scheme shifts the risk from the employer to the employee.

In its recommendation, the Labour Court stated that Pfizer "formally set out to the unions the precise policy and financial reasons for the proposed changes to the structure of the current pensions schemes".

The court said that "the unions should engage with the management with a view to agreeing a new pension schemes that meet the twin objectives of aligning the company's needs and the benefits in the current scheme".

The Labour Court said that "the talks process should address the position of both current and future employees and should make provision for staff transitioning from the current to the new scheme".

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business