Eason to close management’s defined-benefit pension plan
Separate defined fund for general staff unaffected
Eason on O’Connell St, Dublin. It is understood the company told members the pension scheme had become unsustainable on cost grounds and was putting their retirement benefits at risk. Photograph: Dara Mac Donaill
A defined-benefit pension plan operated for some members of management at Irish retailer Eason & Son is to be wound up following a decision by the company to cease paying contributions to the scheme, which is €4 million in deficit.
It is understood the trustees of the scheme have decided to wind up the plan following Eason’s decision to end its contributions to the fund, closed to new members in 2008.
Eason began communicating this decision to members of the scheme yesterday and has set up a helpline for those affected. The wind-up affects 42 staff at Eason, 58 pensioners and 136 deferred members, most of whom left through redundancy programmes.
A separate defined-benefit fund for general employees and those managers who have taken up their roles in recent years is unaffected by this decision.
No comment was available from Eason yesterday but it is understood the company has told members the scheme had become unsustainable on cost grounds and was putting their retirement benefits at risk.
As part of the wind-up, Eason has agreed to make a once-off contribution, thought to be about €2 million or half the deficit in the fund.
It is proposed that pensioner benefits will be financed in full through the use of sovereign annuities and there will be no change to their payments.
Asset share transfer
Employees will see the value of their share of the assets of the plan transferred to a new defined-contribution scheme. with Eason paying 8-14 per cent of basic salary to this new plan. Former employees, who are deferred members of the plan, will see their entitlements transferred to a personal retirement bond.
All active and deferred members are expected to receive close to 100 per cent of their minimum transfer values.
Eason’s decision to end its contributions to this defined-benefit plan is part of a wider move by private-sector employers away from such schemes, which offer a pension promise to employees on their retirement.
This is due to the unlimited nature of the liability for companies, increased costs from extended life expectancies, and the volatility in returns from equities and other asset classes.