ESB strike averted as sides reach agreement on pensions

Ogle claims landmark victory for unions over ‘defined benefit’ arrangement

Unite official Brendan Ogle claimed landmark victory for unions in the negotiations.

Unite official Brendan Ogle claimed landmark victory for unions in the negotiations.


The threat of widespread electricity blackouts in the run-up to Christmas has been averted after ESB management and unions last night resolved their differences over the company’s pension scheme.

However, ESB management appeared to differ significant from the Labour Relations Commission’s (LRC) interpretation of the effect of the settlement on the company’s balance sheet.

The breakthrough was announced last night when the LRC – which had been engaging with both sides – issued a statement confirming a resolution had been reached.

The dispute and subsequent strike threat, which retailers had warned would decimate their trade during the festive shopping period, originally arose after the ESB in 2010 changed the description of the pension scheme in its accounts.

It altered the scheme’s description from defined benefit to defined contribution, meaning any deficit would not appear on the ESB’s balance sheet.

The ESB’s group of unions, led by the Unite official Brendan Ogle, had claimed that this accounting change meant workers could potentially be saddled with responsibility for plugging a deficit of up to €1.7 billion. The company denied that such a deficit existed.

Last night’s agreement states that both sides now agree the pension scheme is a defined benefit arrangement, which is being viewed in industrial relations circles as an important concession by the company.

‘No actuarial deficit’
The LRC statement also says that “no actuarial deficit currently exists in the scheme and that in those circumstances neither party has an intention to adjust their level of contribution . . . at this time”. This implies a shift in the unions’ position on the existence of a deficit. The settlement says that if a deficit does arise in future, both sides will negotiate an agreement to plug it “in line with normal practice”.

The statement, issued by the LRC’s head of conciliation Kevin Foley, suggests the company should now go back to treating the scheme as a defined benefit arrangement in its accounts.

‘Accounting arrangements’

“The commission believes that accounting arrangements for the company should reflect these realities, in other words, the company’s accounts should state clearly that the scheme is a defined benefit scheme.”

The ESB, however, appeared to contradict this element of the LRC release in its own statement: “The resolution of this issue protects the financial strength of ESB – there will be no additional liabilities on ESB’s balance sheet. There will be no change to the accounting treatment of the scheme in the company’s financial statements as a result.”

The company was unable to provide further clarity on this element of the LRC agreement last night.

Mr Ogle last night claimed a “landmark victory” for unions in the negotiations. “Our mandate – to secure the treatment of the scheme as defined benefit – has been fully vindicated,” he told The Irish Times.

When asked what concessions workers had made, he replied that the union had “given nothing in return”. He said the accounting treatment of the defined benefit scheme and any future deficits was a matter “for the company and its auditors”.

Minister for Energy Pat Rabbitte welcomed the resolution and praised the LRC for what he described as their “patient endeavour. The settlement is unqualified good news at this critical juncture of the year and of the country’s economic recovery”.