Staff at AIB in line for better pensions

AIB's staff in the Republic are set to receive enhanced pension benefits. Kevin Foley, chairman of an independent tribunal, is expected to issue a report on Tuesday that will recommend the bank open a new defined benefit scheme for those staff who are currently members of a defined contribution scheme.

Mr Foley, who is director of the conciliation services division at the Labour Relations Commission, is also expected to recommend that AIB increase its annual contribution of behalf of members and that staff be required to make a mandatory payment of their own.

The report follows a long-running negotiation between AIB and the Irish Bank Officials Association. The IBOA has argued that the current defined contribution scheme operated by AIB was out of line with other pension funds offered by Irish banks.

A defined benefit scheme offers a set pension on retirement and is more attractive than a defined contribution one, which relies on the performance of equities and bonds over the working life of a staff member.

Mr Foley's recommendations will need to be approved by AIB's board of directors and by the IBOA's executive committee.

Neither side would comment on the issue.

At present, AIB operates two pension schemes here for Irish staff. The AIB Group Irish Pension Scheme is a defined benefit fund that closed to new members in December 1997.

AIB has more than 7,000 staff in the Republic and 35 per cent are members of this scheme. A contribution of 28.6 per cent is made into the fund by the company. The bank spent €139 million on its defined benefit schemes in Ireland and the UK in 2006.

A defined contribution scheme was opened in January 1998. Under the terms of this fund, AIB makes a payment of 8 per cent of an employee's salary each year.