Labour Court Database __________________________________________________________________________________ File Number: CD93669 Case Number: LCR14516 Section / Act: S26(1) Parties: IRISH COUNCIL FOR OVERSEAS STUDENTS - and - A WORKER;SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Change to pension scheme.
Recommendation:
Having fully considered all of the views expressed by the parties
in their oral and written submission and the outcome of subsequent
discussions, the Court, recognising the member's expectation that
he would receive the Pension Scheme benefit terms, and given the
current financial constraints under which the Company operates,
considers that the claimant should accept the offer of the
Company.
Six months prior to retirement date the parties should review the
situation to see if a supplementary ex-gratia payment can be made
Division: MrMcGrath Mr Keogh Mr Walsh
Text of Document__________________________________________________________________
CD93669 RECOMMENDATION NO. LCR14516
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES:
IRISH COUNCIL FOR OVERSEAS STUDENTS
AND
A WORKER
REPRESENTED BY SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Change to pension scheme.
BACKGROUND:
2. The Council is an independent, non-governmental organisation
which provides support, information and back-up for overseas
students studying in Ireland. The Council was established in
1970. Its main source of funding is a Government
administration grant from the Department of Foreign Affairs
The dispute concerns a proposed change to the Council's
pension scheme for one worker. The present Council pension
scheme was established in 1978, when the worker concerned
joined the scheme. The scheme is a defined benefits pension
scheme, providing for:
(a) Retirement Pension 50% of salary.
(b) Gratuity of one and a half times salary.
(c) Widow's pension of 50% of spouse's pension.
(d) Death-In-Service benefit of one and a half times
salary and refund of own contributions.
(e) Death-In-Service - spouse receives a pension equal
to 50% of the pension plus additional benefit for
dependant children.
The cost to the member is 6.5% of salary. All other costs
are borne by the Council.
Originally there were 6 members in the pension scheme but the
worker concerned is the only member remaining In July, 1992
the Council proposed changing the present scheme to a defined
contribution scheme. This would considerably reduce the
entitlements of the worker concerned. The Council stated
that, because of serious financial difficulties, it would be
unable to continue funding the pension scheme at its present
rate.
There were a number of meetings between the Council and the
Union at local level but no agreement was reached. It was
agreed to refer the dispute to the Labour Relations
Commission and a conciliation conference took place on 15th
April, 1993. At the conference the Council put forward
proposals for a new pension scheme, (details supplied to the
Court) the main points of which were:
A pension of approximately 38% of salary
No lump sum on retirement
This was rejected by the Union. A second conciliation
conference took place on 12th July, 1993 but the Council was
unable to make any further offer. The Union asked for a full
actuarial report on the pension scheme. The report was
furnished some months after the second conciliation report.
It offered a second alternative pension scheme (details
supplied to the Court) but the worker concerned would still
suffer a considerable loss compared to the original pension
scheme.
The dispute was referred to the Labour Court on 29th
November, 1993 under section 26(1) of the Industrial
Relations Act, 1990. A Labour Court hearing took place on
27th January, 1994.
UNION'S ARGUMENTS:
3. 1. The present pension scheme is a group scheme. Members
are not funded individually as the Council claims. The
pension scheme for the worker concerned is a defined
benefit scheme, which means that the benefits of the
scheme are guaranteed. The Council is obliged under the
deeds of trust to honour this agreement.
2. The worker concerned would suffer a huge financial loss
if either of the Council's proposed pension schemes were
implemented. This is totally unacceptable, particularly
as another colleague in the pension scheme, who retired
in 1987, received a full pension and gratuity.
COMPANY'S ARGUMENTS:
4. 1. The main source of funding for the pension scheme is an
administrative grant from the Department of Foreign
Affairs, which has to be negotiated annually. Since
1987 the grant has been reduced considerably and it is
this reduction which has caused the present dispute.
2. In 1990 the Council was forced to close the pension
scheme to new applicants because of the financial
problems. The Council has been unable to offer a new
pension scheme to other staff members to date.
3. There is only one member left in the original pension
scheme. It would cost the Council approximately 70% of
this member's salary for the next 3 pension years to
fund the pension scheme as was originally agreed. The
Council does not have the money.
4. At the conciliation conference on 15th April, 1993 the
Council put forward its proposal for a defined
contribution scheme which was the best it could offer,
given its financial difficulties. This offer was
rejected by the Union. The actuarial report requested
by the Union was obtained at a cost of #1,452 to the
Council.
RECOMMENDATION:
Having fully considered all of the views expressed by the parties
in their oral and written submission and the outcome of subsequent
discussions, the Court, recognising the member's expectation that
he would receive the Pension Scheme benefit terms, and given the
current financial constraints under which the Company operates,
considers that the claimant should accept the offer of the
Company.
Six months prior to retirement date the parties should review the
situation to see if a supplementary ex-gratia payment can be made
~
Signed on behalf of the Labour Court
25th July, 1994 Tom McGrath
C.O'N./D.T. _______________
Deputy Chairman
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Ciaran O'Neill, Court Secretary.