Arnotts indicates it may wind up pension scheme
THE TRUSTEES of the defined-benefit pension scheme operated by Dublin retailer Arnotts have indicated to members that they might have to wind up the fund.
Arnotts has informed the trustees that it will cease payments to the scheme from December 7th as it is not in a position to provide the necessary finance to close the deficit in the fund, which has topped €10 million at certain times over the past two years.
A proposal to freeze the scheme to protect members’ accruals to date, with a defined-contribution scheme established for future service, looks to have been scuppered by new pension regulations.
The trustees have organised meetings today at the Gresham Hotel in Dublin for the 966 members at which they will outline their plans for the scheme.
In a letter to members dated August 17th, Thomas Casey, chairman of the trustees, said: “Under the provisions of the trust deed governing the fund, the ceasing of contributions by the company requires the trustees to wind up the fund (unless the trustees resolve at the date contributions cease to defer the wind-up).”
The Arnotts Staff Pension Fund 2007 has 379 retired members, who will have first call on the scheme’s assets if wound up.
The balance of funds would then be distributed to the scheme’s 290 deferred members (who have left Arnotts but have yet to draw on their entitlements) and 297 active staff.
Mandate, the trade union that represents the bulk of Arnotts’ staff, yesterday issued a statement describing a wind-up as “drastic and unfair” on its members.
The union said deferred and active members could lose 50 per cent or more of their accruals in the fund in the event of a wind-up.
“The unions agreed with Arnotts’ management that the existing defined-benefit scheme would be frozen not wound up,” Mandate general secretary John Douglas said yesterday.
“This approach would have given existing staff and deferred pensioners the best chance to maximise their pension position for their retirement.”
Nigel Blow, Arnotts’ chief executive, was “surprised and disappointed” by Mandate’s claims.
“We appreciate the concerns they have but we have been in dialogue with them about this matter and it is wrong to pre-empt any decision that might be taken by the trustees,” Mr Blow said.
Mandate claims a wind-up would result in a “fire sale” of the fund’s property assets.