Labour Court Database __________________________________________________________________________________ File Number: CD88210 Case Number: LCR11831 Section / Act: S67 Parties: CORAS IOMPAIR EIREANN - and - CIE CLERICAL AND SUPERVISORY TRADE UNION GROUP |
Claim for improvements in existing pension benefits.
Recommendation:
5. Having considered the submissions made by the parties, the
Court has noted that some of the provisions on entry to the main
scheme can give rise to anomalies arising from the requirements of
the Social Welfare Acts which are outside the Company's control.
In this connection the Court notes the statement by the Company
that the Minister for Social Welfare, following representations by
the Ombudsman, is re-examining the various requirements for
eligibility for a State Retirement pension.
However, the Court considers that the Company should now renew its
offer made at conciliation, without prejudice to the outcome of
the position in relation to State Retirement Pensions, to grant
Supervisors full credit for wages grade service in the calculation
of their lump-sum payments on retirement.
Division: Mr Fitzgerald Mr Shiel Mr O'Murchu
Text of Document__________________________________________________________________
CD88210 RECOMMENDATION NO. LCR11831
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: CORAS IOMPAIR EIREANN
AND
CIE CLERICAL AND SUPERVISORY TRADE UNION GROUP
SUBJECT:
1. Claim for improvements in existing pension benefits.
BACKGROUND:
2. This claim concerns 216 supervisors employed in CIE, Iarnroid
Eireann, Bus Eireann and Bus Atha Cliath, who were promoted from
the wage grade and subsequently were required to pay the Public
Sector contribution of P.R.S.I. only. This had the effect of
providing a less favourable pension for these employees when they
retire. The issue was discussed in 1983 and 1984 and on 31st
July, 1985 the Group claimed that CIE salaried supervisors should
be entitled to a minimum pension of the equivalent amount payable
from the wages grade pension scheme plus the amount of social
welfare benefit appropriate to a man and his wife as applying at
the date of retirement. Between 1985 and early 1987 various
meetings and correspondence ensued. On 11th March, 1987 the
Company rejected the claim. No agreement was reached through
local negotiations and on 18th March, 1987 the matter was referred
to the conciliation service of the Labour Court. A conciliation
conference was held on 9th June, 1987. At the conference the
Company intimated that the actuaries had advised that if
supervisors wished to achieve full credit for wages grade service
for the lump-sum payment on retirement, the additional
contribution would be .5% of salary, per supervisor, but the
Company would only be prepared to extend this concession if the
overall claim was withdrawn. The Union would have welcomed this
improvement but it considered it would not resolve the basic
problem identified in the claim. No agreement was reached and on
26th February, 1988 the case was referred to the Court for
investigation and recommendation. A Labour Court hearing was held
on 15th April, 1988.
GROUP'S ARGUMENTS:
3. 1. There is no solution internally to the apparent anomalies
demonstrated by this claim. That such is the case, is a
clear indictment of the Company's failure to recognise and
respond to inequities which evolved from the changes
introduced in 1956 and 1972 insofar as the supervisory
grades were concerned. No attempt was made to highlight
these inequities in the Company's submission to the
Minister for Communications in the amendment scheme on
notionable pensionable membership. Furthermore the
Company never took any initiative to have the problems
represented by the claim seriously considered by the
Superannuation Fund Management Committee, despite the fact
that the CIE 1951 Superannuation Scheme was financially
viable.
2. Because of current policies within the separate companies
resulting in a higher level of retirement and having
regard to the age profile of supervisors, generally, the
anomaly identified by this claim is being exacerbated with
practically every supervisory retirement. The higher paid
operatives retiring from the Company now receive a
combined total pension from the Company and social welfare
of £130.70 per week, and even taking into account the
actuarial annuity value of the retirement lump-sum, there
are very few, retiring supervisors who enjoy a comparable
pension.
3. This claim is fully validated and it should therefore be
judged on its merits and not solely on the Company's
ability to meet it. The fact also that the Company
continues to implement the anomaly by payment of pensions
on an ex-gratia basis to supervisors, over 55 years of
age, in accordance with the arrangements agreed in 1971
undoubtedly, in the Group's view, represents an
established precedent in this area.
4. The origins of this problem go back to the 1950s. The
employment of inspectors and certain other supervisory
grades in CIE was insurable at the full ordinary rate up
to September, 1956. Following consideration of all the
relevant factors the regulations were amended in 1972 to
provide that C.I.E. personnel promoted to the grades
involved before September, 1956 continued to be insurable
at the full ordinary rate while persons promoted from that
date on became insurable at the special public service
rate. In general, therefore, supervisors lost their
entitlement to a social insurance pension and in the main
must rely entirely on the C.I.E. occupational pension.
3. 5. The Company had disregarded supervisors in the category
covered by this claim who would eventually receive a
pension less favourable than if they had been allowed to
remain in the wages grade pension scheme. Staff promoted
as supervisors who are 55 years of age or over are treated
more favourably by the Company. In 1972 the Company
agreed, in the case of supervisors 55 years and over, at
that time, that where on retirement of such persons the
pension payable to them would be less than the amount that
would be payable from the wages grade pension scheme plus
the amount of social welfare benefit appropriate to a man
and his wife as applying at the date of retirement, it
would pay the difference as an ex-gratia payment.
6. With regard to the lump-sum payable on retirement the
Group acknowledge that, for pension purposes, this
entitlement has an annuity value, which the Group agree
should be calculated on an actuarial basis in the
assessment of pension. It should be emphasised however
that there is a further anomaly in that C.I.E. supervisors
receive a much less favourable retirement lump-sum than
their clerical counterparts.
7. The retirement lump-sum is calculated on the basis of
1/30ths of retiring salary for every year of
supperannuation fund membership, with a maximum of
45/30ths. Therefore a clerical officer who entered the
service at 18 years of age can retire at 63 with maximum
pension and lump-sum benefit. The situation for the
supervisor however is entirely different. As a
consequence of the negotiations between the Group and the
Company in 1972, which involved the supervisors in payment
of additional contributions of .75% to the fund,
supervisors under 55 years of age were allowed credit in
full for adult wages grade service in the calculation of
the annuity to a maximum of 40 years' membership, but the
previous arrangement of credit for two-thirds of adult
wages grade service continued in the calculation of the
lump-sum payment. This effectively means that no
supervisor in C.I.E. irrespective of his length of service
can receive the permissible maximum lump-sum on
retirement.
8. The Court should also note that any wages grade employee
within the Company promoted as a supervisor between the
age of 27 and 43 is obliged to pay a contribution of
8.625% of his salary to the superannuation scheme which is
substantially more than he previously paid in social
welfare contributions and as a consequence of which he
receives a lesser overall pension than if his employment
status had not been altered.
3. 9. The Company have made reference during the negotiations to
the scheme for the purchase of notionable pensionable
membership which was introduced by way of statutory
instrument No. 339 of 22nd October, 1986. Effectively,
this scheme gives salaried staff who do not have
sufficient service for maximum pension entitlement the
option before reaching 58 years of age to purchase
notional pensionable membership by way of periodic
deductions from salary. However, any supervisor between
the ages of 20 and 60 years of age seeking to exercise
this option will be obliged to pay a contribution of 14%
of his salary for each year of notionable pensionable
membership to be purchased, which the Court will
appreciate is prohibitive, insofar as the grades in
question are concerned.
COMPANY'S ARGUMENTS:
4. 1. The Company has had an actuarial assessment of the cost of
the claim prepared and its concession to existing members
would be £1.27m with the additional cost of £1.55m if it
were to be extended to existing pensioners giving a total
cost of £2.82m. These costs cannot be borne by the
Company in view of its serious financial position and the
strict subvention policy laid on it by the Government.
2. The decision regarding eligibility for a State retirement
pension rests with the Minister for Social Welfare and the
Company should not be required to compensate staff who for
whatever reason do not qualify for such a pension.
3. There is provision in the main scheme for members to
purchase additional service. Concession of the claim
would lead to the creation of serious inequities (details
supplied to the Court) and to a situation whereby one
category of staff in membership of the CIE superannuation
scheme 1951 would be treated more favourably than the
other.
4. Supervisory staff are given credit for their wages grade
service in determining their pension benefits at
retirement. The Group, in effect, are seeking to have the
Company compensate such staff for the loss of their State
old age pensions in cases where this occurs. While the
Company may sympathise with supervisors who have
contributed at the higher PRSI rate for a number of years,
yet on their retirement do not qualify for a State
retirement pension because they do not have the required
average contributions the resolution of this problem is
not one which it should be obliged to take on board but is
a matter for the Minister for Social Welfare to decide.
In this regard it would appear from recent pronouncements
by the Minister that following representations by the
Ombudsman he is re-examining the various requirements for
eligibility for a State retirement pension.
4. 5. There is provision in the CIE superannuation scheme, 1951
to allow salaried staff including supervisory staff,
purchase notional service. In these circumstances the
Company considers that it would be placed in an invidious
position were it required to supplement the scheme
pensions of supervisory staff who did not have the
necessary service to enable them qualify for the maximum
annuity payable at normal retirement age, because there
are other salaried staff in a similar situation who joined
CIE at a late age.
6. Up to 1971 wages grade staff promoted to the supervisory
grade and admitted to the salaried staff superannuation
scheme were given credit for 2/3rds of the wages grade
service. In 1971 the scheme was amended to give them
credit for all their wages grade service in calculating
annuities. This called for an additional contribution
from such staff of 1/8th of 1%. Supervisors who were over
age 55 at that time did not benefit by this amendment and
on their retirement continued to receive credit for 2/3rds
of their wages grade service in the calculation of their
annuity and capital sums. It was agreed for this category
of staff to apply a fall-back arrangement whereby their
scheme pensions would be supplemented if the pension was
less than the sum of the appropriate wages grade pension
and the State retirement pension in respect of a man and
wife. This fall-back arrangement does not apply to the
staff covered by this claim as they receive in determining
the annuity payable under the terms of the CIE
superannuation scheme, 1951. Fall-back is paid on an
ex-gratia basis and does not form part of the pension
scheme.
7. There are many benefits which accrue to a supervisor on
promotion which are not enjoyed by wages grade staff such
as entry to a service related pension scheme, an
associated spouses and childrens scheme, additional two
days annual leave, better sick-pay benefits, a high rate
of pay and additional earnings.
8. Supervisory staff may by virtue of their previous wages
grade service or if they were insurable at the Class A
contribution rate in another employment qualify for a
State retirement pension in addition to their entitlement
under the Company's pension scheme. The CIE pension
schemes are not co-ordinated, in other words pensions are
payable in full without any reduction in respect of the
State Old Age Pension.
RECOMMENDATION:
5. Having considered the submissions made by the parties, the
Court has noted that some of the provisions on entry to the main
scheme can give rise to anomalies arising from the requirements of
the Social Welfare Acts which are outside the Company's control.
In this connection the Court notes the statement by the Company
that the Minister for Social Welfare, following representations by
the Ombudsman, is re-examining the various requirements for
eligibility for a State Retirement pension.
However, the Court considers that the Company should now renew its
offer made at conciliation, without prejudice to the outcome of
the position in relation to State Retirement Pensions, to grant
Supervisors full credit for wages grade service in the calculation
of their lump-sum payments on retirement.
~
Signed on behalf of the Labour Court.
Nicholas Fitzgerald
___29th___April,____1988. ______________________
T. O'M. / M. F. Deputy Chairman