LCR15469

FULL RECOMMENDATION CD/97/3 RECOMMENDATIONNO.LCR15469 (CC96/835) INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : UNITED BEVERAGES SALES LIMITED (DUBLIN) (REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr McGrath Employer Member: Mr Brennan Worker Member: Mr Walsh

SUBJECT:
1. Funding of pension scheme.





BACKGROUND:

2. In 1995 an actuarial valuation of the Company's pension scheme was carried out following which the Company was advised that a contribution rate of 7% of salary was required in order to maintain existing benefits.

The scheme was initially set-up in 1967 and is funded on the basis of employer/employee contributions of 2.5% each.

The Company proposed that the increase be met on a 50/50 basis and is prepared to increase its contribution to 3.5% of aggregate payroll provided the employees' contribution rate is increased to 3.5%.

Local level discussions took place at which the Union sought additional funding from the Company as follows:-

(A) The 2% required to maintain existing benefits.
(B) Funding for the introduction of an early retirement option.



The matter was referred to the Labour Relations Commission. A conciliation conference took place on the 23rd October, 1996. As agreement could not be reached the dispute was referred to the Labour Court on the 6th January, 1997 under Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 7th February, 1997.




UNION'S ARGUMENTS:

3. 1. The Company's scheme is generally out of line with similar schemes in the industry.

2. The Company has prospered in recent years in a difficult and highly competitive industry. The current situation affords it the opportunity to enhance its modest contribution to the scheme.

3. The Company's introduction of increased contributions since 1995 for new employees should be discontinued.




COMPANY'S ARGUMENTS:

4. 1. When the scheme was initially set-up, it was clearly understood and accepted by all parties that the overall contribution to the scheme would be funded on a 50/50 basis. Any further increases in respect of funding should be on a similar basis.


2. The Company is prepared to raise its contribution to 3.5% of the aggregate payroll provided the employees' contribution rate is increased to 3.5%.






RECOMMENDATION:

The Court has fully considered the views expressed by the parties in their oral and written submissions.

The Court recommends that in this specific instance the Company should pay the additional amount required to maintain the pension funding.

The parties should however discuss and seek to agree the funding arrangements as between the Company and the members of the scheme for the future.

These arrangements could be discussed in conjunction with the claims of the Union for improvements in the pension.


In the event of agreement being reached, the Pension booklet should be amended and should include the basis for funding the scheme.



Signed on behalf of the Labour Court



Tom McGrath
3rd March, 1997______________________
F.B./D.T.Deputy Chairman



NOTE

Enquiries concerning this Recommendation should be addressed to Fran Brennan, Court Secretary.