AIB to close defined benefit pension plans

AIB IS to close its defined benefit pension scheme for staff, the bank said yesterday, as it announced a series of changes to employee terms and conditions as part of an effort to save more than €30 million annually.

Although the bank’s defined benefit scheme has been closed to new entrants since 1997, about 6,500 employees will be affected by the change, which will see staff automatically switch to defined contribution schemes.

AIB staff are also to lose preferential rates on loans and on deposits from September 1st, as well as allowances for club subscriptions. While “club subs”, which allows staff members to claim membership fees for gyms and other societies, were abolished for new entrants late last year, they will now be eliminated for all staff members.

Company cars are also to be scrapped next year, although staff will receive a non-pensionable cash payment in lieu.

The news that more than 600 of the bank’s top managers are to take reductions in their total packages of 7.5-15 per cent did little to soften the stance of unions yesterday, who vowed to resist the pension changes.

Members of AIB’s senior executive committee, which includes chief executive David Duffy, are to take a drop of up to 15 per cent in total compensation, while senior executives and senior mangers will take pay cuts of up to 10 per cent and 7.5 per cent respectively.

The bank is proposing to extend the current pay freeze, which has been in place since 2008, to 2014.

AIB is 98.9 per cent owned by the State which has injected €20.7 billion into the bank and its subsidiary, EBS.

The latest cost-saving proposals do not apply to EBS staff.

AIB is seeking 2,500 redundancies from its 14,000-plus staff. A large proportion of these redundancies are expected to be secured through early retirement.

Some €170 million is expected to be saved through the redundancy programme.

Thousands of AIB staff affected by end of defined benefit scheme: page 7