FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2004 SECTION 26(1); INDUSTRIAL RELATIONS ACT; 1990 PARTIES : VITA CORTEX (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - A GROUP OF WORKERS DIVISION : Chairman: Mr McGee Employer Member: Mr Murphy Worker Member: Mr Nash |
1. Proposed Winding Up Of Defined Benefit Pension Plan
BACKGROUND:
2. The Vita Cortex group of companies specialises in the manufacture of foam and fibre. The Company employs a total of 135 people around the country. In June 2006, the Company sent a memorandum to administrative staff, informing them that it would cease contributions to the Defined Benefit Plan with effect from 31st December 2006. This decision was made on the basis of an Actuarial Valuation, which had been carried out earlier in the year. The memorandum outlined that they would pay an employer contribution of 7.5% of basic pay in respect of each plan member for retirement benefits to the DB plan for 2006. The company's decision would result in the winding up of this plan and a switch to a defined contribution scheme.
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 was not reached, the dispute was referred to the Labour Court on the 1st February, 2007 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 15th March, 2007.
WORKERS' ARGUMENTS:3. 1. The Company did not engage in consultation prior to its announcement and seeks to impose a significant change in terms and conditions.
2. This would mean that the entire risk in respect of accrued pension benefits would be transferred to the employee and it would see a significant cut in pensionentitlements in the future.
3. The change is unnecessary considering the strong financial position of the Company.
COMPANY'S ARGUMENTS:
4. 1. The Company can no longer continue to fund the Defined Benefits Plan due to the significant cost increases in 2006.
2. The Company was advised that the potential for funding levels and costs to fluctuate from year to year is much higher in a small Defined Benefits Plan.
3. The Company are increasing the employer contribution for 2006 by 23% and commit from 1st January 2007 to pay this increased contribution into the Defined Benefits Plan.
RECOMMENDATION:
The Court has carefully considered the submissions made to it by the parties.
The Court is conscious of the current stated difficult commercial position of the Company. It is also of the view that the financial situation of the defined benefit scheme is also quite difficult. The Court feels, however, that given the high level of social welfare integration in the scheme coupled with the funding history of the scheme and the relatively low level of contributions from both sides having regard to such schemes generally and particularly at the present time, that the problem is not insurmountable with appropriate levels of effort and goodwill from both parties.
The Court accordingly, recommends that the parties should immediatly re-engage with the object of jointly addressing the means necessary to retain the defined benefit scheme in operation. The assistance of the LRC may be sought if necessary.
Signed on behalf of the Labour Court
Raymond McGee
4th September, 2007______________________
JFDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Lisa McCarthy, Court Secretary.