How Safe Is Your Pension??
The following from today's IRISH TIMES newspaper.
How safe is YOUR pension??
Could you afford to live on 37% of what you thought you were entitled to?
STATE COMPANY Bord na Móna has told workers that it cannot pay a pension to which some of them have been contributing for decades.
The company told 240 workers who are members of its defined benefit pension scheme that its deficit has reached the point where it cannot meet its obligations to them.
The announcement does not affect about 400 former Bord na Móna workers who are members of the scheme and are drawing defined benefit pensions from it.
The company did not reveal the shortfall in the scheme, but The Irish Times understands that its funds stand at €68 million while the deficit runs to about €52 million.
It said in a statement yesterday that “given the recent collapse of investment markets and the resulting liability increase, a significantly negative impact on the funding situation in Bord na Móna has arisen”.
It added that the company is continuing talks with representatives of its pension schemes and is hopeful that a joint solution can be found.
The workers affected are mainly clerical, administrative, supervisory and managerial grades.
According to their trade unions, Unite and Siptu, some of those hit have been working for the company and contributing to the scheme for up to 40 years.
It is understood that the company is proposing a compromise which would involve paying 37 per cent of the accrued benefit.
Unite regional organiser Dermot Mahon said that this was the Government effectively defaulting on its pension obligations. “For a privately owned company to act in this way would be reprehensible,” he said. “For a company which is 95 per cent in the ownership of a Government that is seeking to apply a pension levy on workers is beyond belief. We will meet management again next week by which time we would expect sense to prevail and for Minister Eamon Ryan and his Government colleagues to have ordered a reversal.”
He added that the company expected to make €30 million profit this year and plans to invest €500 million in research and development over the next five years.
The Department of Communications, Energy and Natural Resources, which is responsible for the company, said yesterday that it was aware that Bord na Móna has a pension deficit, and that it is in talks with workers and other relevant parties to try and deal with the issue.
“The department is confident that management can find a solution to the issue,” its statement said.
Normally, both workers and management contribute to pension schemes, which are managed by trustees and kept separate from the business itself. However, the business is ultimately liable to pay the beneficiaries from the scheme, and has to account for any shortfalls.
Bord na Móna was originally responsible for managing the State’s peat bogs, but has branched into waste management, energy and horticulture products.