ADJUDICATION OFFICER DECISION

Adjudication Decision Reference: ADJ-00002134

Complaint(s)/Dispute(s) for Resolution:

Act	Complaint/Dispute Reference No.	Date of Receipt
Complaint seeking adjudication by the Workplace Relations Commission under section 13 of the Industrial Relations Act, 1969	CA-00002897-001	27/02/2016

Date of Adjudication Hearing: 29/06/2016

Workplace Relations Commission Adjudication Officer: Joe Donnelly

Procedure:

In accordance with Section 13 of the Industrial Relations Act, 1969, following the referral of the complaint(s)/dispute(s) to me by the Director General, I inquired into the complaint(s)/dispute(s) and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint(s)/dispute(s).

Complainant’s Submission and Presentation:

The complainant believes that the company is in breach of a 1998 WCM agreement promising him the same general conditions, including pension, as all other staff. The complainant has been working for the company since 2/10/1978 in a craft position. He is in dispute with the respondent regarding his pension entitlements. Two pension schemes operate within the company, one for staff and one for the “Shop Floor”. Both pension schemes were “Defined Benefit” schemes and pension entitlements were calculated on an identical set of criteria. The shop floor included the craft section, which consisted of about 30 people. The shop floor pension scheme was introduced on 1/1/1981 and was compulsory for all shop floor employees. The staff pension was introduced about that time also. At some point after that, the staff decided to forego a 2.2% pay increase and instead had the 2.2% paid into the pension scheme to backdate pensionable service. In January 1998 the craft section signed a WCM agreement with the company, which saw the craft section being staffed. In a clarification letter, issued on the day before the agreement was accepted, the section was promised the same general conditions as all other staff. This letter specifically includes the wording “Including Pension”. There was absolutely no difference whatsoever in the pension benefit except the pensionable service. For that reason the complainant believes that his pensionable service was to be backdated. For the next seven years the complainant’s annual pension statement reflected that belief. Then in 2005 the pension company issued a letter to the complainant stating that there had been an error in the previous pension statements and that his pensionable service was now based on the date he joined the pension scheme. They stated that it was never the respondent’s intention to backdate the pensionable service. The complainant immediately challenged this change in pension entitlement and exchanged a number of letters and had conversations with representatives of the pension company. However he could not resolve the situation. Last year a member of staff who had been a member of the craft section when the pension scheme was introduced, retired. This person had moved onto a staff position a number of years before the WCM agreement. This person joined the shop floor pension scheme on the same date as the complainant did but his pensionable service is based on the date he started with the company. This provides a precedent. The complainant’s argument is that the company is in breach of the 1998 WCM agreement by not honouring the conditions outlined in the clarification document. The argument is based on four points. The clarification document issued by the company on the day before the agreement was accepted. The annual pension statements issued until 2005. The precedence set by backdating other people’s pensionable service. The funding of his pension since 1998 The funding. Until 1998 the funding of the complainant’s pension was 6% of his basic wage. He paid 3% and the company paid 3%. This was considered to be adequate funding as there was no sign of the bottom falling out of pension funds at that time. When the complainant was staffed in 1998, the funding for him was increased by another 2.2% of salary. That was an increase in funding of 36.67%. The complainant is aware that a lot of that funding was lost during the financial crises, but the cost to the fund if he was successful in his claim will be an increase of €750 annually and €2250 in his lump sum. That is one twelfth of what the funding increase was capable of providing.

Respondent’s Submission and Presentation:

The complainant is a member of the Maintenance Dept. of the respondent and until 1998 this group was designated as the Craft Section. In 1998 agreement was reached with that section on World Class Manufacturing and the section were redesignated as being part of the Staff Group.

A clarification document at the time of the agreement stated that “the same general conditions as apply to all other staff including pension, sick pay, etc. will also apply”. There were various conditions that were being harmonised. The calculation of pensionable salary in the Staff scheme was based on full basic salary whilst in the Craft scheme it had been basic salary less the consolidated bonus component. A payment was made into the scheme to ensure that full basic salary would be covered for pensionable purposes but backdating this entitlement to the day employees commenced working was not part of the consideration.

The Pension Scheme administrators were in error in applying the full service years as pensionable salary. This error was identified in 2005 when an employee was retiring. The issue was referred to the Pension Ombudsman who found that it was a clerical error and that the person concerned had been paid in accordance with the rules of the Pension Scheme. The administrators issued a letter of clarification to all members of the scheme including the complainant.

No employee transferred to the Staff Section in a similar situation to the complainant is in receipt of a pension in excess of the rules of the Pension Scheme.

The extra payment made by employees was due to the fact that the Pension Scheme had financial issues relating to the funding standards required under legislation.

Decision:

Section 13 of the Industrial Relations Act, 1969, requires that I make a recommendation in relation to the complaint(s)/dispute.

Recommendation:

It is conceded that some of the issues that have arisen could cause confusion. Pension schemes and their operation are, by their very nature, complicated and it is therefore unfortunate that mis-information was provided by the professional administrators of the Scheme. I note that that particular issue was investigated by the Pensions Ombudsman in 2005 who concluded that there was no loss arising and that the employee concerned was paid in accordance with the Scheme’s trust deeds. All members affected were advised accordingly at that time and their benefit statement amended. In addition, it is widely known that many traditional pension schemes have run into difficulties due to investment market performance and the strict funding standards now required by law. In these circumstances extra funding was required in order to deal with these problems rather than provide extra benefits. Unfortunately in many cases these schemes were still forced to close.

In the light of the above I have to conclude that the complainant’s pension is being calculated in accordance with the rules of the Pension Scheme and I therefore cannot recommend in favour of the complainant’s claim.

Dated: 15^th September 2016