FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2004 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : WATERFORD JOINERY (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - ATGWU & UCATT DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Grier Worker Member: Mr O'Neill |
1. Employee Pension Contributions
BACKGROUND:
2. The dispute before the Court concerns employees contributions to the Defined Benefit Pension Scheme operated by the Company. The Union's claim is that the appropriate employee contribution is 4% according to the Scheme. The contributions of employees has increased above this level since 1995. The Union are seeking retrospective payment of all contributions paid since that date. It is the company's position that a long established formula of fifty-fifty contributions should continue.
The dispute could not be resolved at local level and was the subject of a Conciliation Conference under the auspices of the Labour Relations Commission. As agreement could not be reached, the dispute was referred to the Labour Court on 24th October, 2006 in accordance with Section 26(1) of the Industrial Relations Act 1990. A Labour Court hearing took place on the 11th September, 2007
UNION'S ARGUMENTS:
3. 1 It is the Unions claim that the Company have no authority in place that gives them the right to change the pension plan from Defined Benefit, funded by 3% of workers pensionable salary to a fifty - fifty funded scheme. The members should contribute the amount as outlined by the pension provider in December 2001. That amount was 4% of pensionable salary for workers.
2 The actual amount deducted by the Company over the years for pension contributions less the recommended 4% contribution should be repaid to the workers.
3 Neither the Company or the pension provider could explain how the scheme moved from a Defined Benefit 4% to a fifty - fifty funding Defined Benefit.
COMPANY'S ARGUMENTS:
1 The pension fund was set up on the basis of fifty - fifty funding and that has always been the understanding between the parties as to how contributions are to be made. This is reflected in the Trust Deed at various points in time over the years.
2 It is also the basis on which the necessary increases have been discussed and implemented.
3 This is the first time the equal split on funding for the Defined Benefit Scheme has been challenged.
RECOMMENDATION:
A dispute had arisen between the parties on the amount of contributions employees are liable to pay into the Company’s Defined Benefit Pension Scheme. The Unions are of the view that 4% employee contribution is the appropriate contribution according to the Scheme and sought retrospective payment of all contributions paid over that level deducted since 1995. They maintained that when there was a change of pension provider in 1980, the new provider stated that the employee contribution rate was 4% and not 50/50 or 5.75%. The Unions stated that the Company could not produce the original Trust Deed and consequently could not substantiate their position that the Scheme was a 50/50 contribution scheme.
The Company submitted that the Scheme, which was set up in 1978, has had a long established contribution rate paid on a 50/50 basis between the employer and the employees. It outlined the history of those contributions rates over the years as follows:
Year Employer Employee
1978 3% 3%
1986 3.55% 3.55%
1987 4% 4%
1995 5.75% 5.75%
2002 7.05% 7.05%
and in 2005, when the dispute arose, it was planned to increase the contributions to 10.65% employer and 10.65% employee.
The Trust Deed and Rules of the Scheme 2002, states:
- “Each member shall contribute 50% of the Agreed Percentage Rate as a percentage of his Pensionable Salary.”
However, the Court is of the view that the contribution recommended by the Actuaries in 2005 is an excessive contribution rate for the workers concerned in this claim. Accordingly, the Court recommends that discussions should commence between the parties to consider how pension arrangements will operate for the future. For the avoidance of any doubt, the Court recommends that the workers who are currently members of the scheme should not have their pension benefits amended and the benefits should continue in accordance with those provided for under the Scheme. Furthermore, the Court recommends that the Scheme should be amended to ensure that the employee contribution rate does not exceed the rate set prior to 2005.
The Court so recommends.
Signed on behalf of the Labour Court
Caroline Jenkinson
22nd October 2007______________________
DNDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to David P Noonan, Court Secretary.