FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(3), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : RADIO TELEFIS EIREANN - AND - RTE TRADE UNION GROUP DIVISION : Chairman: Mr Duffy Employer Member: Mr Grier Worker Member: Mr O'Neill |
1. Claim for improved Pension entitlements.
BACKGROUND:
2. In 1987, RTE decided to close its existing Defined Benefit (DB) pension scheme to new members of staff and introduced a Defined Contribution (DC) pension scheme. In 2005, the RTE Trade Union Group (TUG) referred to the RTE Industrial Relations Tribunal (IRT) a claim that RTE staff, who are members of the DC scheme, together with future members of staff, would become members of a new DB scheme. In rejecting the TUG claim, the IRT recommended that enhancements be made to the existing DC scheme. The IRT recommendation was accepted by RTE but rejected by TUG.
An Independent Facilitator was subsequently appointed but it was not possible to reach agreement.Both parties attended a meeting with the National Implementation Body on 15th May, 2008, which recommended that the parties jointly refer the matter to the Labour Court. Accordingly, the parties requested that the Court investigate the matter of the RTEDC schemeand a Court hearing took place on the 27th May, 2008, in accordance with Section 26(3) of the Industrial Relations Act, 1990.
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UNION'S ARGUMENTS:
3. 1. A defined benefit pension has, for a long time, been a hallmark of employment in the Public Sector. Many see this as a balance to the generally lower salaries on offer in the Public Sector.
2. The RTE workers employed under the current defined contribution scheme have suffered a system of "pension apartheid" which is unique in the Public Sector.
3. RTE has been unable to provide documentary evidence to support its claim that the Department of Finance would never sanction the re-introduction of a defined benefit pension scheme.
EMPLOYER'S ARGUMENTS:
4. 1. RTE is committed to providing decent pensions for staff on retirement within the confines of reasonable financial prudence.
2. Notwithstanding RTE's belief that the IRT recommendation offers the best pension scheme for the majority of its staff, it has suggested the introduction of a hybrid pension scheme,incorporating elements of a defined benefits scheme and elements of a defined contribution scheme, in response to the concerns expressed by the TUG.
3.RTE believes that its offer of a lump sum injection of €3.75 million into the pension funds of current members of the defined contribution scheme is fair and reasonable.
RECOMMENDATION:
It is noted that agreement has been reached on the introduction of a hybrid pension scheme incorporating elements of a defined benefits scheme and elements of a defined contribution scheme. However, despite extensive negotiations between the parties, and the use of the RTE internal disputes resolution procedure, agreement has not been reached on key aspects of a new arrangement.
The Salary Cap
One of the principle aspects of the proposed scheme on which the parties have not agreed is the salary level above which pension entitlements will accrue on a defined contribution basis. The Management position is that the average salary within the organisation should be used as a benchmark and that 50% of this figure should be the salary cap above which the defined contribution element should apply. This, the Management argue, will result in a fair sharing of the risks inherent in providing pension cover. The Union rejects this approach. They say that a reasonable salary level should be set in line with that which applies in other employments where hybrid style pension schemes have been adopted.
The Court believes that the best approach is to put in place a defined salary level up to which pension entitlements will accrue on a defined benefit arrangement, producing a pension of 50% of that amount. All salary above the figure should be pensionable on a defined contribution basis.
The Court recommends that the capped salary level be fixed at €48,000 p.a. It further recommends that this cap increase in line with national wage increases or in the absence of a national wage agreement, by the percentage increase in basic pay within the organisation overall.
Lump Sum
The second major issue of contention concerns the Group's claim for a lump sum injection into the pension funds of current members of the defined contribution scheme. There is disagreement on both the amount which should be provided and the distribution of that amount. In the Court's view it would be inequitable to confine the benefit accruing from any such lump sum injection to those who opt to remain in the defined contribution scheme. It seems to the Court that in circumstances in which the Authority has put forward proposals for a new hybrid scheme, those who opt to avail of that offer should not be disadvantaged relative to those who opt to remain with the current arrangements. Accordingly, the Court recommends that the funds available be divided equally amongst those who opt to remain with the existing DC scheme and those who opt for the new arrangement. The formula for distribution should be as recommended by the IRT but using the individual fund base as at 31st December 2007. The Court further recommends that the amount to be made available for this purpose be increased to €5 million.
Funding
The Court notes that Management wish to have a unitary funding rate across both elements of the new scheme. The Group, for their part want the direct contribution element of the new scheme funded in line with the funding arrangement recommended by the IRT in respect of the existing DC scheme.
The Court recommends that the Management proposal on funding structure (as set out in Appendix 14 of the Management submission) be accepted, However, the Court recommends that the common funding rate be increased to 8.75%.
Other Matters
The Court recommends that the other aspects of the new scheme, as proposed by Management, should be accepted.
Signed on behalf of the Labour Court
Kevin Duffy
30th June, 2008.______________________
JMcC.Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Jonathan McCabe, Court Secretary.