FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : IRISH CO-OPERATIVE ORGANISATION SOCIETY LIMITED - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Flood Employer Member: Mr McHenry Worker Member: Ms Ni Mhurchu |
1. Improved pension scheme.
BACKGROUND:
2. The Irish Co-operative Organisation Society (ICOS) represents twenty-five agricultural co-operative societies. A total of one thousand, five hundred workers are members of the ICOS's contributory pension scheme and a further three hundred are members of a non-contributory scheme. In April, 1998, the Union submitted a claim for enhanced benefits to the contributory pension scheme. The employees contribute 3.5%, while the employers contribute 9.5%. Local negotiations and two conciliation conferences at the Labour Relations Commission in December, 1998, and February, 1999, failed to resolve the issue. The Union requested referral of the dispute to the Labour Court in accordance with Section 26(1) of the Industrial Relations Act, 1990. The ICOS agreed and the Court investigated the dispute on the 15th of April, 1999.
UNION'S ARGUMENTS:
3. 1. Pensionable earnings:- Pensionable pay in the current scheme is based solely on basic pay which is approximately £200 per week. However, the majority of workers earn twice that amount when shift pay, productivity pay and 4% bonus are included. These payments, and regular rostered overtime payments, should be included for pension calculations.
2. Accrual rate/Maximum pension:- The present scheme which pays 1% or 1/100th per year of service, with a cap of 30 years, is clearly out of line with the norm in industry. The majority of schemes pay 1/60th per year of service with maximum pensionable entitlement accruing after 40 years. The present scheme should be amended accordingly. The maximum pension payable should also be increased from 30% to 66 2/3%.
3. Death in service provisions:- At present the scheme pays two years' basic pay on the death of a member in service. This amount is out of line with the norm for industry in general. A lump sum of five times actual annual earnings would provide security for a member's dependants at a fairly minimal cost, as this type of insurance cover is relatively inexpensive. The current scheme also pays a spouse's pension of 50% of the member's entitlement.
4. Duration of members' contributions:- The number of years that a member has to contribute to the scheme should be limited to the maximum years that he/she can qualify for under the scheme. At present, a member may contribute for over 40 years yet can gain credits for a maximum of only 30 years.
5. Indexation:- Currently there is no provision for indexation in the pension scheme, although the trustees provide a modest adjustment on a discretionary basis each year. The members would feel more secure if a specific provision were made within the scheme such as a maximum of 5% or cost of living, whichever is the lower.
6. Permanent part-time employees:- Permanent part-time employees should be eligible to join the pension scheme in the same way as their permanent full-time colleagues. Part-time workers are a growing feature of commercial life, many of them are female workers, and it is important that they are not discriminated against.
7. Seasonal employees:- Seasonal employees may join the scheme if they work a full seven months in each twelve month period for three consecutive seasons. This requirement is too restrictive and should be modified, e.g., to work for five months in each of any two consecutive years or a total of twelve months in any three consecutive years.
ICOS'S ARGUMENTS:
4. 1. The Union's claim must be dealt with in the context of the Partnership 2000 national agreement. Clause 4 of the appendix to the agreement provides for improvements to pension schemes "where these are substantially out of line with appropriate standards in comparable employments".
2. The current pension scheme is somewhat different in certain respects to the vast majority of schemes in the country. This does not mean that it is "substantially out of line". However, the scheme can be improved and brought fully into line with overall standards elsewhere by:-
- Increasing the maximum pension to either 35% or 40% on retirement at 65 years of age, with either 35 or 40 years' service;
- Providing a spouse's pension of 50% of the member's pension on death in retirement;
- Bringing the members' contributions more into line with standards elsewhere. To cover the cost of the above, members' contributions would need to increase to either 5.65% or 6.6%.
4. The death benefit of two years' pay is not "substantially out of line" with standards elsewhere. In addition, the discretionary provisions which provide pension increases after retirement are in line with the norm. The cessation of members' contributions after 35 or 40 years would be a major deviation from the norm, which would require increased contributions to offset the loss of funds.
5. There is no basis for including plus payments in the calculation of pensionable pay. To do so would result in societies with little or no plus payments subsidising those who have. The suggested increase in contributions would provide the vast majority of members with a pension of 40/60ths or better when state benefit is taken into account.
RECOMMENDATION:
The Court, having considered the written and oral submissions, is satisfied that the Company's scheme is not "substantially out of line with appropriate standards in comparable employments".
The Court, while not conceding the Union's claim, recommends that the Union enter into discussions with the Company to agree the improvements in the current scheme as the Management outlined in its Court submission:-
1. Increase in maximum pension.
2. Spouse pension.
3. Members' contribution into line with standards elsewhere.
4. Conditions applying to admission to membership of seasonal and part-time employees.
The Court so recommends.
Signed on behalf of the Labour Court
Finbarr Flood
10th June, 1999______________________
D.G./D.T.Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Dympna Greene, Court Secretary.