Glanbia disposal of dairy arm on back burner after pension plan knockback

GLANBIA’S PLAN to try and reheat its proposal to offload the Irish dairy business to members of the co-operative appears to have hit a road block with the decision of the Pensions Board to knock back the proposed restructuring plan for its pension deficit.

Under the terms of the deal, the majority of Glanbia’s €85.8 million pension deficit would have transferred with the dairy business to its new owners.

This didn’t sit well with many farmers and co-op members and is thought to have played a role in the proposal being narrowly voted down at an EGM in Kilkenny recently.

Glanbia paid €25.6 million in contributions to its various pension schemes in Ireland and the UK last year.

Glanbia must now go back to the drawing board and devise a new funding plan that will get the pension scheme into solvency within 10 years, rather than the 14-year timeframe sought by the company and the funds trustees.

It’s understood that the company had originally wanted to wipe out the deficit over 17 years, something the regulator was never likely to agree to.

Any new funding plan will most likely have to involve increased contributions from members or a further paring back of benefits for workers. Or a combination of both.

This is the unpalatable reality for all members of Irish pensions schemes at present and the regulator is knee deep in proposals to return funds to the black.

The Pensions Board recently extended until November the deadline for these section 50 applications.

So Glanbia has a bit of breathing space to tweak its proposal.

But quite where it leaves its plan to once again try and sell the dairy business, remains to be seen.