Labour Court Database __________________________________________________________________________________ File Number: CD93617 Case Number: LCR14388 Section / Act: S20(1) Parties: FAS - and - A WORKER |
Pension Scheme.
Recommendation:
The Court has given careful consideration to the submissions, oral
and written, of the parties.
Central to the determination of the issue, in the Court's view, is
the treatment of the Cleanaway pension fund transfer to the FAS
pension scheme. The Court accepts that the treatment of the
#20,000 involved in the manner suggested by the claimant under
three separate scenarios would be contrary to the standard
arrangements that apply to inter-pension fund transfers in the
private sector, and has no precedent in the case of FAS.
The Court finds itself, therefore, unable to accept the claimant's
contention in that regard and rejects his claim.
However, the Court would recommend that the effective date for
calculation of pension credit, on a non-consessionary basis, in
respect of the #20,000 transfer should be 1st May, 1988 and that
the same date should apply to the calculation by reference to the
concessionary rate of the balance due by the claimant.
Division: Ms Owens Mr Brennan Mr Rorke
Text of Document__________________________________________________________________
CD93617 RECOMMENDATION NO. LCR14388
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 20(1), INDUSTRIAL RELATIONS ACT, 1969
PARTIES:
FAS
AND
A WORKER
SUBJECT:
1. Pension Scheme.
BACKGROUND:
2. In 1984 a dispute concerning a pension scheme in ANCO was the
subject of a Labour Court investigation and recommendation
(LCR 9119 refers). The recommendation provided that workers who
joined ANCO between 1967 - 1978 could purchase additional service
for pension purposes at concessionary rates. In 1987 ANCO
implemented the recommendation. The worker concerned joined ANCO
in 1974 and went on a career break from 1st May, 1985 to 30th
April, 1988. During this time ANCO was amalgamated into FAS.
Prior to going on a career break the worker applied to be included
in any concessionary purchase agreement which would be effected.
On return from the career break the worker advised FAS that he
wished to retire at the age of 60. He made a request to purchase
7.888 years in order to achieve full pension at this age by a
combination of lump sum and periodic payment. Following
discussions between the parties, FAS conceded the worker's right
to purchase added years on concessionary terms by periodic
payments but rejected his claim to purchase added years on
concessionary terms by way of lump sum purchase.
The worker claimed that he was treated unfairly vis a vis other
workers in FAS who purchased added years. He sought to refer the
dispute to a Rights Commissioner for investigation but FAS
objected to such an investigation. On the 1st November, 1993, the
worker referred the dispute to the Labour Court under Section
20(1) of the Industrial Relations Act, 1969 and agreed to be bound
by the Court's recommendation. The Court investigated the dispute
on the 10th January, 1994. The hearing was adjourned to enable
the parties to submit additional information to the Court. A
further hearing was held on the 11th March, 1994.
WORKER'S ARGUMENTS:
3. 1. Even though the worker applied in writing to have the
terms of LCR 9119 applied to him, FAS did not advise him in
1987 when those concessionary terms were applied to other
workers. (Details of two specific cases who benefited under
the concessionary terms were supplied to the Court).
2. During his three year career break the worker was
employed by Cleanaway Ltd. and on his return to FAS arranged
to transfer #20,000 from the Cleanaway pension fund to the
FAS pension scheme. This purchased 3.038 years on
non-concessionary terms. In 1991, FAS advised the worker
that he could purchase the required years on concessionary
terms by the Cleanaway #20,000 or by periodic payment or a
combination of both. FAS is now denying the worker the
opportunity to use the #20,000 to purchase added years at
concessionary rates contrary to its commitment in 1991.
3. Actuarially there should be no difference between a lump
sum payment and a payment by periodic purchase to buy added
years.
4. It would be logical and equitable, create no undesirable
precedents and be in the spirit of the concessionary purchase
scheme for FAS to allow the worker to purchase, on
concessionary terms, the 7.888 years by a combination of the
lump sum of #20,000 from the Cleanaway pension fund to be
calculated as from the worker's return from career break (1st
May, 1988) and periodic payment as from the date of return
from career break in respect of the years remaining to be
purchased.
FAS'S ARGUMENTS:
4. 1. The worker concerned was treated in the same fashion as
other workers on leave of absence who purchased additional
years at concessionary rates. (Details supplied to the
Court).
2. A transfer payment of #20,000 was transferred from the
Cleanaway Pension Fund to the FAS Pension Fund which
purchased 3.038 years at ordinary rate. Service credit can
only be effected in such instances at ordinary rate. This is
standard practice when funds are transferred from one pension
scheme to another. There is no basis for arguing that the
actuarial value of the Cleanaway #20,000 should be calculated
at concessionary rates. There was a substantial advantage to
the worker in effecting a transfer payment at the time as
opposed to his receiving #20,000, which would have attracted
taxation.
3. The worker is currently purchasing 3.826 years at
concessionary rate, and the remaining 1.024 years at ordinary
rate. This costs 6.575% of salary. He has been offered an
improved facility to purchase the full 4.850 years he would
require on a concessionary basis, with the 3.038 years from
the Cleanaway transfer purchase remaining unchanged. This
would cost 4.995% of salary. The worker's claim to be
allowed purchase the entire 7.888 years on concessionary rate
is not sustainable, and no such undertaking was given to him
by FAS. He was advised that the maximum number of years
which could be purchased at concessionary rate was 4.85. The
offer from FAS is a fair and reasonable offer in the
circumstances.
RECOMMENDATION:
The Court has given careful consideration to the submissions, oral
and written, of the parties.
Central to the determination of the issue, in the Court's view, is
the treatment of the Cleanaway pension fund transfer to the FAS
pension scheme. The Court accepts that the treatment of the
#20,000 involved in the manner suggested by the claimant under
three separate scenarios would be contrary to the standard
arrangements that apply to inter-pension fund transfers in the
private sector, and has no precedent in the case of FAS.
The Court finds itself, therefore, unable to accept the claimant's
contention in that regard and rejects his claim.
However, the Court would recommend that the effective date for
calculation of pension credit, on a non-consessionary basis, in
respect of the #20,000 transfer should be 1st May, 1988 and that
the same date should apply to the calculation by reference to the
concessionary rate of the balance due by the claimant.
~
Signed on behalf of the Labour Court
11th April, 1994 Evelyn Owens
T.O.D./M.M. _______________
Deputy Chairman
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Tom O'Dea, Court Secretary.