Labour Court Database __________________________________________________________________________________ File Number: CD90370 Case Number: LCR13026 Section / Act: S20(1) Parties: ST. LUKE'S HOSPITAL - and - A WORKER |
Dispute concerning the guaranteed retirement benefits of a worker.
Recommendation:
6. The Court has given very careful consideration to the detailed
documentation furnished by the claimant, and to the supplementary
information supplied at the Court hearing.
The Court is satisfied that the contract of employment offered to
the claimant by letter of 24th August, 1961 is the relevant
contract for the claimant and that the pension to which he is now
entitled is the Superannuation Scheme referred to in that letter.
The Court is further satisfied that the claimant was furnished at
various dates prior to his retirement with information relating to
his specific salary for pension purposes which left him in no
doubt as to what his entitlements would be. In these
circumstances, the Court is satisfied that the claim should be
rejected.
Division: Ms Owens Mr McHenry Mr Devine
Text of Document__________________________________________________________________
CD90370 RECOMMENDATION NO. LCR13026
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 20(1)
PARTIES: ST. LUKE'S HOSPITAL
(REPRESENTED BY THE FEDERATION OF IRISH EMPLOYERS)
and
A WORKER
SUBJECT:
1. Dispute concerning the guaranteed retirement benefits of a
worker.
BACKGROUND:
2. In August, 1961 the worker was interviewed for the position of
accountant in the Hospital, and on 24th August, 1961 the Hospital
wrote a letter to the worker offering him this post and outlining
his conditions of employment. The post was accepted by the worker
and he commenced employment in September, 1961. The worker was
included in the Hospital's contributory pension scheme which was
managed by Irish Pensions Trust Limited. In 1969 the Voluntary
Hospitals' Superannuation Scheme came into effect and was operated
by the Department of Health. At that time all members of the
Irish Pensions Trust (I.P.T.) scheme were given the option of
transferring to the Voluntary Hospitals' Superannuation (V.H.S.)
Scheme. The Irish Pensions Trust issued a document to all members
entitled "Comparison of the salient features of the Department's
proposed scheme and the existing contributory pension plan."
Further offers to join the new scheme were made in 1971 and 1977.
The worker concerned decided not to transfer to the scheme.
3. On 5th November, 1987 the worker wrote to the
Secretary/Manager of the Hospital stating that there appeared to
be a misunderstanding in relation to his retirement benefits. In
this letter the worker stated that in 1961 a member of the
interview board told him that the post was permanent and
pensionable and that the pension scheme was the same as the civil
service pension scheme and that this was the determining factor in
the worker's acceptance of the post as he was not satisfied with
the salary. Further, that when the worker received the Irish
Pension Trust document in 1968 he had no hesitation in remaining
in the Hospital's pension scheme as the document stated that "The
Guaranteed Retirement Benefits under both schemes at age 65, were
in fact, basically the same." On 26th November, 1987 the
Secretary/Manager wrote to the worker advising him that as he did
not avail of the options offered to him in 1969, 1971 and 1977 to
join the V.H.S. Scheme, his retirement benefits under the I.P.T.
scheme must be regarded as final. By letter of 3rd February, 1988
the worker was informed that there was an employer credit of
#4,500 available from the Irish Pensions Trust and that in view of
the worker's long and loyal service to the Hospital, the directors
had decided that this money could be used to augment his
retirement benefits either as a lump sum gratuity or in addition
to his annual pension. The worker decided to accept this money as
a lump sum. However, the worker continued to dispute the issue of
his pension entitlements after his retirement in 1988 and wrote a
number of letters to the Hospital on the matter. On 15th June,
1990 the worker referred the matter to the Labour Court for
investigation and recommendation under Section 20(1) of the
Industrial Relations Act, 1969. The worker agreed to be bound by
the recommendation of the Court. The Court investigated the
dispute on 3rd September, 1990.
WORKER'S ARGUMENTS:
4. 1. In 1960 the Department of Health authorised the Hospital
to introduce a pension scheme for the eligible members of
their staff, this scheme was put into effect on 1st February,
1961. The worker was not a member of the staff at that time
and consequently did not have an opportunity to personally
inspect the authority. In August, 1961 the worker was
interviewed for the position of accountant in the Hospital.
In the course of the interview, one of the members of the
interview board informed the worker that the Hospital operated
its own pension scheme, that this was a very good one and that
it was in fact the same as the civil service pension scheme.
The worker was also told that it was a condition of
appointment that he join the pension scheme and contribute 5%
of his salary which would be deducted monthly. The worker was
not impressed with the salary offered as it was considerably
lower than the salary that he was earning at that time, but
the fact that the post carried a pension scheme which was the
same as the civil service pension scheme was the determining
factor in the worker's acceptance of the post.
2. The worker was appointed and reported for duty in
September, 1961. The Secretary-Registrar repeated the
conditions of appointment and informed the worker that there
was a booklet covering the conditions and benefits of the
pension scheme but that he had run out of stock and that he
would give the worker a copy when the new stock arrived. The
worker heard nothing further until December, 1968 when he
received a document from the Secretary-Registrar. This
document advised the members of the St. Luke's pension scheme
of the introduction by the Department of Health of a new
pension scheme for members of the voluntary hospitals. There
was also a document addressed to "all members of St. Luke's
Hospital Contributory Pension Plan" advising them that the
Hospital was giving members an option of remaining in the St.
Luke's pension scheme or of joining the new pension scheme as
from 1st January, 1969 (details supplied to the Court). The
document set out in detail the benefits appropriate to each
scheme. The worker studied the document carefully and was
satisfied that the benefits available to the members of the
St. Luke's scheme were superior to those available in the
Department of Health's new scheme. The benefit which was of
fundamental importance to the members of both schemes was
stated as, "The guaranteed retirement benefits under both
schemes at age 65 are in fact basically the same."
3. In 1977 the worker also received a document headed "Saint
Luke's Hospital Contributory Pension Plan," (details supplied
to the Court). This set out in detail the pension, gratuity
and the death benefit payable to each of the members of the
St. Luke's pension plan at that date. The retirement benefits
in each case were identical to the retirement benefits payable
to members of the civil service pension scheme. The guarantee
contained in the document of 1969 and the document of 1977
confirmed in writing the conditions governing the worker's
appointment in 1961. When the worker wrote to the
Secretary/Manager of the Hospital on 5th November, 1987
regarding his retirement benefits he received a response
stating that the worker's retirement benefits when confirmed
by Irish Pensions Trust Limited must be regarded as final
(details supplied to the Court). If the worker had been
informed when he was being interviewed for the post of
accountant that his retirement benefits would be determined by
the Irish Pensions Trust Ltd twenty seven years later he would
not have accepted the appointment.
4. In response to the worker's many letters protesting
against the failure of the Directors to honour the conditions
of his appointment the Board of Directors offered to use an
employer credit of #4,500 which was available from Irish
Pensions Trust Limited to be used to augment the worker's
retirement benefits. This offer was made in view of the
worker's long and loyal service and the worker accepted this
gesture in the spirit in which it was made. However, the
worker pointed out that this sum which was approximate to the
underpayment in respect of his gratuity resulted in the I.P.T.
pension being reduced still further. To date the worker is
owed arrears in respect of pension and gratuity for 1988, 1989
and 1990 (details supplied to the Court).
MANAGEMENT'S ARGUMENTS:
5. 1. The Irish Pensions Trust gratuity and pension is based on
basic salary at age 60, and the pension is not index linked.
The V.H.S. scheme is based on the basic salary at age 65 and
the pension is index linked. The worker also receives the
contributory old age pension in addition to the I.P.T.
pension. In 1977 when the final option to transfer to the
V.H.S. scheme was given it was stipulated that where an
officer qualified for the contributory old age pension, the
V.H.S. scheme pension would be reduced by the amount of that
pension. As a result of the #4,500 added to the gratuity lump
sum, the worker received a larger gratuity than he would have
if he was in the V.H.S. scheme. A comparison of pension
entitlements shows that in 1988 the worker was in receipt of a
higher pension (combining the I.P.T. pension and the old age
pension), than that which he would have received under the
V.H.S. scheme (details supplied to the Court). While the
V.H.S. scheme is index linked, it is management's belief that
it would take some time before this figure would exceed the
I.P.T. pension and contributory old age pension. There are
also benefits in the I.P.T. scheme which do not apply in the
V.H.S. scheme (details supplied to the Court).
2. The worker has stated that he accepted the position in the
Hospital on the understanding that the pension scheme was the
same as the civil service pension scheme. He also stated that
this was confirmed to him when he reported for duty in 1961.
However, the person alleged to have made this statement is
deceased and there is no reference in the worker's contract
(issued on 24th August, 1961) to similarities with the civil
service pension scheme (details supplied to the Court). The
worker has also stated that he received a document in 1968
comparing the salient features of the Department's proposed
scheme and the existing I.P.T. pension scheme and that he
decided to stay with the I.P.T. scheme on the basis that the
"guaranteed retirement benefits under both schemes at age 65
were in fact basically the same," (details supplied to the
Court). This document was issued by the Irish Pensions Trust
and not by the hospital management. The statement in this
document does not guarantee that retirement benefits at age 65
would be the same, it merely states that the guaranteed
retirement benefits are basically the same.
3. As the worker was the accountant in the Hospital,
management is of the opinion that this gave him plenty of
opportunities to be aware of the differences between the two
schemes. As part of his duties the worker received pension
details from Irish Life Assurance outlining members' pension
details and he also received copies of his renewal statements
each year which also indicated his final pension (details
supplied to the Court). The I.P.T. pension scheme's
explanatory booklet states that no adjustments will be made in
pensions or contributions after 60 years of age and that
pension benefits are based upon the length of pensionable
service and basic salary five years before the pension age
(details supplied to the Court). The worker received three
opportunities to transfer into the V.H.S. scheme. The worker
has already received a higher gratuity payment than that in
the V.H.S. scheme and is receiving at present a higher
pension. A recommendation against the Hospital could have a
knock on effect through this particular Hospital and possibly
other voluntary hospitals.
RECOMMENDATION:
6. The Court has given very careful consideration to the detailed
documentation furnished by the claimant, and to the supplementary
information supplied at the Court hearing.
The Court is satisfied that the contract of employment offered to
the claimant by letter of 24th August, 1961 is the relevant
contract for the claimant and that the pension to which he is now
entitled is the Superannuation Scheme referred to in that letter.
The Court is further satisfied that the claimant was furnished at
various dates prior to his retirement with information relating to
his specific salary for pension purposes which left him in no
doubt as to what his entitlements would be. In these
circumstances, the Court is satisfied that the claim should be
rejected.
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Signed on behalf of the Labour Court
Evelyn Owens
__________________________
27th September, 1990 Deputy Chairman.
U.M./J.C.