INDUSTRIAL RELATIONS ACTS, 1946 TO 2004
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Ms Jenkinson
Employer Member: Mr Doherty
Worker Member: Mr Nash
1. AVC's - PRSI Savings
2. This case concerns a dispute between Rexam Limited and SIPTU in relation to the PRSI savings achieved as a result of Additional Voluntary Contributions (AVC's) made by employees of the Company to their pension scheme. The Company's pension scheme had become insolvent as a result of poor investment performance since the events of 11th September 2001. In 2004, the parties agreed that PRSI savings achieved by the Company in relation to pension contributions would be re-invested into the pension scheme to assist in its return to solvency.
The Union is now seeking that similar PRSI savings on AVC's also be re-invested in the pension scheme for the same purpose.
The Company's position is that it is not actually saving on PRSI contributions as a result of the AVC facility as it bears the cost of administering the scheme and the actuarial costs associated with returning the pension scheme to solvency and cannot sustain any additional re-investment costs.
The dispute could not be resolved at local level and was the subject of a conciliation conference under the auspices of the Labour Relations Commission. As agreement was not reached the matter was referred to the Labour Court on 20th October 2005 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on 27th September, 2005, the earliest date suitable to the parties.
3. 1. The pension scheme has become insolvent as a result of poor performance of investments over the past number of years. In 2004 an actuarial evaluation provided for increases in employer and employee contribution to return the scheme to solvency within a 3.5 year timeframe. The scheme would return to solvency much earlier if the Company re-invest these savings into the Scheme.
2. The additional contributions made by employees are done so on a voluntary basis. If these contributions were not made, the employer would have to pay the additional PRSI levy. It is unacceptable that the Company benefit from the provision of AVC's while the main scheme is in financial difficulty.
4. 1. An agreement was reached between the parties in 2004 in relation to the additional contributions to be paid into the pension scheme by both the employer and the employee. The scheme is due to return to solvency in line with the 3.5 year timeframe.
2. The Company is not actually saving as a result of the AVC contribution issue as it must bear the administration, actuarial and other costs associated with the Scheme. The Company is merely following revenue guidelines with regard to the provision of the AVC's. The Union's claim is also cost increasing and precluded under national wage agreements
The Court has examined the details outlined by both parties in their oral and written submissions, and is satisfied that the agreement on addressing the deficit in the pension scheme, which took effect from 1st October 2004, was honoured by both parties and sees no grounds at this stage to amend it by the Union’s suggestion. The Court is of the view that the agreement cannot be re-negotiated at this point and it should be allowed to run its course of a maximum of three and a half years.
Therefore, the Court does not find in favour of the Union. The Court so recommends.
Signed on behalf of the Labour Court
3rd October 2006______________________
Enquiries concerning this Recommendation should be addressed to Andrew Heavey, Court Secretary.