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FULL RECOMMENDATION
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : NATIONAL COLLEGE OF IRELAND
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Geraghty Employer Member: Ms Connolly Worker Member: Mr Hall |
1. Contributions To DB Pension Scheme
BACKGROUND:
2. The current contribution rate amounts to a total of 19.2% (i.e. 10.8% employer, 8.4% staff).
On the recommendations of the actuarial review, an increase of 2.8% is required, to 22%, to maintain the viability of the scheme.
This dispute could not be resolved at local level and was the subject of a Conciliation Conference under the auspices of the Workplace Relations Commission.
As agreement was not reached, the dispute was referred to the Labour Court on the 24th December 2019 in accordance with Section 26(1) of the Industrial Relations Act, 1990
UNION'S ARGUMENTS:
The Union accepts burden-sharing, in principle, but argues that National College of Ireland, being currently in a strong financial position, should bear the cost on this occasion.
Previously, when the financial position of National College of Ireland was less favourable, the members 'had put their shoulders to the wheel' and the Union is of the
opinion that, should those times return, National College of Ireland will come looking for an increased contribution from the members
COMPANY'S ARGUMENTS:
The College believes that a 70% : 30% split would honour the commitment to burden sharing and that it places no unnecessary financial burden on the members.
The College is also of the belief that such a split is more equitable and will provide greater viability for the continuance of the scheme, should a further deficit arise in the future.
RECOMMENDATION :
The cost of ensuring the continuation of the College’s Defined Benefit pension scheme has increased since the last valuation. The question before the Court is how this additional cost should be met?
A proposal from the Employer that 70% of the additional cost be met by them and that 30% be met through additional contributions from the scheme members was rejected by the Union, who pointed out that the members had agreed to this split on a previous occasion when the scheme was in difficulty, at which time the Employer did not have the capacity to resolve that difficulty without a substantial input by the members.
The Union argued that the Employer was in a position financially, at present, to meet the entire additional cost but noted that the Union would be willing again in the future to engage constructively on matters regarding the pension scheme, if required.
For their part, the Employer regard burden sharing in order to protect the scheme as an issue of principle, due to the substantial benefits accruing to scheme members and also for reasons of equity, as many staff in the College are in a Defined Contribution scheme.
The Court recognises that the retention of a Defined Benefit scheme is of considerable value to its members and notes the commitment of both parties to any constructive engagement in the future that is necessary. In particular, the Court views with favour the acceptance by the Union that, should it be necessary, it will be open to discuss the question of burden share in respect of any future increased costs.
Above all, the most important issue, in the Court’s view, is to protect the ongoing viability of the scheme.
In light of the Union’s positive acknowledgement regarding the future and given the current prevailing circumstances, the Court recommends as follows;
1. From 1 April 2020, the increased contribution of 2.8% should be split so that 90% of the increased cost is taken on by the Employer and 10% of this increase is taken on by the scheme members.2. The retrospective element from 1 April 2019 to 1 April 2020 should be shared on a 50/50 basis.
Signed on behalf of the Labour Court
Tom Geraghty
NJ ______________________
12 March 2020 Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Noel Jordan, Court Secretary.