Labour Court Database __________________________________________________________________________________ File Number: CD94278 Case Number: LCR14543 Section / Act: S20(1) Parties: GREENCORE GROUP - and - MANUFACTURING SCIENCE FINANCE |
Claim for improvements in Pension Scheme and the extension from 3 years to 6 years of the "Contribution Holiday".
Recommendation:
The Court having considered the submissions of the parties, both
written and verbal, finds that the claim in relation to the
improvement in the pension scheme is cost increasing within the
terms of the PESP.
Additionally the Court finds that the trustees acted within the
terms of the pension plan when they agreed the conditions for the
second "Contribution Holiday".
The Court in all the circumstances of these claims does not
recommend concession
Division: Ms Owens Mr Keogh Mr Walsh
Text of Document__________________________________________________________________
CD94278 RECOMMENDATION NO. LCR14543
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 20(1), INDUSTRIAL RELATIONS ACT, 1969
PARTIES:
GREENCORE GROUP
AND
MANUFACTURING SCIENCE FINANCE
SUBJECT:
1. Claim for improvements in Pension Scheme and the extension
from 3 years to 6 years of the "Contribution Holiday".
BACKGROUND:
2. The workers concerned in the dispute are members of the
Greencore Group Staff Pension Scheme (formally the Siuicre
Eireann CPT Pension Scheme 1969). The name of the scheme was
changed in 1993, to reflect the change following
privatisation.
The basic scheme benefits are provided on a non-contributory
basis, funded by the Company. Members may contribute at
2%/3%/4% of pensionable salaries to provide for varying
levels of spouses benefits.
The benefit payable at the normal retirement age of 65 years
is 1/80th of salary for each complete year of pensionable
service, less 1/40th of the State retirement pension for each
complete year of pensionable service after 17th December,
1979, excluding service between 17th December, 1989 to 17th
December, 1992.
In 1990, the Trustees, with the agreement of the employer,
decided:-
(i) that members contributions would be temporarily
suspended for a three-year period from 1st May, 1990
until the results of the next actuarial valuation
(1993) were known; and
(ii) the three year period 18th December, 1989, to 17th
December, 1992, would not be included in the deduction
calculation for State benefit when pensions become
payable. This three year allowance was also granted to
pensions in payment; and
(iii) the Company contributions were temporarily suspended
for a three year period commencing 1st April, 1989, to
31st March, 1992.
In 1993 the Trustees, with the consent of the employer, made
the following changes:
(i) suspension of the authorisation to make deductions from
pensionable salaries in respect of members
contributions was to continue until the results of the
next actuarial valuation (1995) were known and the same
applied to the Company to 1995; and
(ii) the three year State offset was re-introduced for
pensioners but on the basis of it being absorbed by
cost of living increases in pensions in payment. There
were no reductions to pensions in payment.
In 1993, the Company informed the Union that it intended to
extend the "Contribution Holiday" by a further three years.
The Union indicated that it was opposed to any further
extension of a Contribution Holiday unless it was part of an
overall scheme which included improvements in pension
benefits. The Union submitted a claim as follows:
(1) Preserved benefits for pre - 1991 service.
(2) The abolition of the claw-back.
(3) Retirement on full pension for persons over 60
years of age with 40 years service.
(4) Added years.
(5) Indexation.
The Company rejected the Union's claim. The matter was the
subject of two conciliation conferences under the
Chairmanship of an Industrial Relations Officer of the Labour
Relations Commission but no agreement was reached.
The Union referred the dispute to the Labour Court on 11th
May, 1994, in accordance with Section 20(1) of the Industrial
Relations Act, 1969 and agreed to be bound by the Court's
recommendation. A Labour Court hearing took place on 5th
July, 1994.
UNION'S ARGUMENTS:
3. 1. Substantial surpluses have accumulated in the scheme
which should be utilised to improve the pension benefits
of the workers concerned.
2. The Union's claim is not cost increasing and is
submitted on the understanding that the costs of any
improvement in the members benefits be funded from the
surpluses accumulated in the scheme.
3. There should be no further "Contribution Holiday" except
by agreement.
4. The average return on the pension fund in 1993 was 47%.
This would indicate that a greater surplus exists now
than in 1989 when the Company introduced its
"Contribution Holiday".
5. Substantial surpluses have accumulated in the fund and
in the circumstances discussions regarding improvements
in the scheme should commence with preservation of pre -
1991 service a priority.
6. Preservation is compulsory for all service after
January, 1991. The recommendation of the Pension Board
was clearly that preservation of service prior to
January, 1991, should be a priority for pension schemes.
The annual report of the Pension Board confirms this
(details supplied to the Court).
COMPANY'S ARGUMENTS:
4. 1. The "surplus" referred to by the Union comprises of
monies funded by the Company and is not available for
use in the manner requested by the Union.
2. The National Pensions Board recommended that the
Statutory Pensions Board keep the issue of extending the
preservation requirement to pre - 1991 under review.
The original recommendation in the first report of the
National Pensions Board was that the review should take
place within ten years of the Pensions Act coming into
force. The National Pensions Board has changed its mind
because of the costs involved.
3. The Pay Related Social Insurance contribution which
included the cost of State Pensions, amounted to
#1,998,453 in 1993 in respect of the workers concerned.
In the circumstances its reasonable and normal to
integrate State Pension benefits with compulsory scheme
benefits.
4. The trustees of the scheme with the employers consent
have consistently maintained the value of pensions in
payment.
5. The normal retirement age under the rules of the scheme
is 65 years. To grant pensions earlier than the normal
retirement age would be expensive and the Company is not
prepared to approve such benefit changes.
6. The Union's claim is precluded under the terms of the
Programme for Economic and Social Progress (PESP).
RECOMMENDATION:
The Court having considered the submissions of the parties, both
written and verbal, finds that the claim in relation to the
improvement in the pension scheme is cost increasing within the
terms of the PESP.
Additionally the Court finds that the trustees acted within the
terms of the pension plan when they agreed the conditions for the
second "Contribution Holiday".
The Court in all the circumstances of these claims does not
recommend concession
~
Signed on behalf of the Labour Court
10th August, 1994 Evelyn Owens
F.B./D.T. ___________________
Deputy Chairperson
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Fran Brennan, Court Secretary.