LCR20563

The Court held formal hearings involving the parties and also held bilateral meetings with each of the parties in the course of its investigation. The Court received extensive written and oral submissions on the issues covered by the referral and also obtained additional information which it requested in the course of the investigation. The Court is grateful for the degree of assistance and cooperation that it received from both parties and for the thoroughness of their submissions and input. This greatly assisted the Court in fully understanding the totality of issues underlying the proposals that it is required to address.

The Court fully appreciates that many of the recommendations that follow will impact negatively on established and long standing conditions of employment of those represented by the Union. However, in the circumstances now pertaining the Court is fully satisfied that the implementation of the changes which it now recommends are crucial to ensuring the future viability of the business and protecting the employment that the Bank provides.

In relation to the issues before it the Court recommends as follows: -

Closure of the AIB Defined Benefit Pension Schemes (DB schemes)

The Court recommends that the DB schemes be closed for future accrual with effect from 31^stDecember 2013. Thereafter, future accrual of pension entitlements should be through a new defined contribution pension scheme.

Structure of Defined Contribution Scheme (DC scheme)

The Court requested that technical experts representing the Union and the Bank should advise it on the structure of a defined contribution scheme, including the contribution levels to that scheme. The Court has received the report of this technical group which is annexed to this Recommendation. The Court recommends that the report be adopted by the parties and that a scheme in line with the proposals contained therein is put in place. The Court further recommends that the contribution structure proposed in this report be adopted.

Initial Two Year Period -2014- 2015

The Court recommends that on the closure of the DB schemes on 31^stDecember 2013, and as part of the transition to the new DC arrangements, the Bank should agree to the payment of the base employer DC contributions and the relevant employer matching contributions for a period of two years commencing on 1^stJanuary 2014. There should be no requirement on staff to make matching contributions during this period. After this initial period, the Bank should contribute the standard 10% rate with one-for-one employee matching contributions up to the prescribed limits set out in the technical group’s report, annexed to this Recommendation.

Benefit Changes

• (a)Ill Health Retirement
  • 
    Ill health retirement benefit should only apply to accrued service up to the date of closure of the DB schemes to future accrual and should be reduced to take account of early payment.
  
  (b)Income Continuance
  • 
    Income continuance arrangements should continue to apply but they will require amendment to reflect the recommended changes to pension arrangements. The Court recommends that the parties review the arrangements with a view to finalising an agreed position by the end of October 2013.
  
  (c)Investment Management Expenses
  • 
    The Court notes that investment management expenses are currently paid by the Bank. That arrangement should continue to apply until the end of 2016 at which point the position should be reviewed.
  
  (d)Spouses / Civil Partners / Dependants’ Pensions on Death in Service
  • 
    The multiple for spouses / civil partners / dependants pensions on death in service from the DC scheme should be nine times salary.
  
  (e)Revaluation of Deferred Benefits
  • 
    Accrued DB benefits should be revalued in line with regulatory and statutory requirements
  
  (f)Funding of the DB Schemes
  • 
    The changes proposed by the Court are recommended in the context of the funding plans agreed between the Trustees and the Bank and approved and / or planned for approval by the relevant regulator(s). In the event of any material change in this regard the matter should be referred back to the Court for review.
  
  (g)Normal Retirement Date (NRD)
  • 
    It is recommended that any employee who currently has a NRD of less than 65 should have the option to extend their NRD to 65.
  
  
  
  

• (a) Structure of the Current Schemes / Governance
  • 
    The new pension arrangements should not give rise to any change in the Trustee structure of the current schemes. In the normal course changes may arise from alteration in regulatory or legislative requirements. Where such regulatory / legislative changes arise they should be notified through the normal industrial relations procedures.
  
  (b)Shareholding
  • 
    It is noted that the Union have sought that the Bank’s pension scheme benefit from a future sale of the Bank. The Court further notes that the Bank is not in a position to respond to the Union’s proposal in that regard as this is a matter for its shareholder.

    The Court recommends that the parties should review this matter in the event of such a sale taking place.

    Future Pay Arrangements

Legacy Pay

The Court notes the position of the parties in relation to what are described as legacy pay issues. The Court recommends that this matter be disposed of in the context of the overall provisions of this recommendation.

Extended Working Week

The Court recommends that those whose current working week is less than 36 hours should be brought up to 36 hours with effect from 1^stOctober 2013. With effect from 1^stApril 2014, those with a working week of less than 37 hours should have their attendance hours extended to 37 hours.

Once –off Payment

In consideration of the conclusion of an agreement in the terms of this Recommendation all members of the Union (IBOA) in the Republic of Ireland, below the grade of manager, should receive a payment in an amount equal to 4% of salary. The date of implementation of this recommendation should be agreed between the parties and in default of agreement should be referred back to the Court for final recommendation.

Residual issue

The Court is aware that there are certain residual matters between the Bank and the Union arising from legal proceedings affecting staff outside the jurisdiction of the Court relating to increments and fixed merit increases. The Court strongly urges the Bank to positively address those matters in the interests of bringing finality to all outstanding staff related issues.

Signed on behalf of the Labour Court



Kevin Duffy
1st July, 2013______________________
JFChairman



NOTE

Enquiries concerning this Recommendation should be addressed to John Foley, Court Secretary.

We refer to the previous general report issued to the Labour Court from the Technical Group. This was provided in the context of the Court issuing a Recommendation clarifying the various positions which both the Bank and IBOA set out in regard to the proposed closure of the Bank’s Defined Benefit Pension Schemes.

In respect of new Defined Contribution Pension Scheme arrangements, the Technical Group has engaged in significant discussions and has now arrived at an agreed position in respect of a proposed tiered, defined contribution scheme for the future. This design takes on board the significant impact on staff by virtue of their age and service with the Bank and puts forward a compromise position within the parameters set out for the Technical Group which attempts to minimise the impact on staff and at the same time is conscious of the ongoing costs to the employer.

In its consideration of new Defined Contribution arrangements, the Technical Group considered the impact on members retirement benefits at retirement, from an actuarial perspective, posed in moving from defined benefit to defined contribution arrangements for staff with a wide spectrum of potential service to normal retirement date (NRD). To address the inherent disadvantage for those with less opportunity in terms of service to normal retirement date, and hence experience a higher cost of building up additional benefits before retirement, a tiered structure is proposed for consideration by the parties. The parties hope that this will help deliver more level outcomes across the board for staff. In this regard it is also proposed that any staff with an NRD of less than age 65 will have an option to extend their NRD to age 65.

The proposed new DC structure is set out below:

No compulsory employee contributions

New DC structure to replace existing DC arrangements

The Technical Group commends this to AIB and IBOA as well as the Labour Court for positive consideration.

RSM Farrell Grant Sparks

Joseph G. Byrne & Sons Consulting Actuaries Ltd

BDO

Mercer (Ireland) Limited

Mercer Limited