Pfizer seeks changes to Irish staff pension scheme
US company’s pension plans due to go before Labour Court on November 17th
Pfizer wants to move 900 of its Irish workers from two non-contributory pension schemes, that offer them a proportion of their salary on retirement, to a new plan without that guarantee. Photograph: Andrew Kelly/Reuters
Drug maker Pfizer’s plans to freeze its salary-linked pension plans and move workers to a new scheme are due before the Labour Court this week.
Pfizer wants to move 900 of its Irish workers from two non-contributory pension schemes, that offer them a proportion of their salary on retirement, to a new plan without that guarantee.
The US multinational confirmed on Monday that there will be a hearing in the Labour Court in relation to its plans on Friday, November 17th after it failed to reach agreement on its plan with its trade unions.
While Pfizer wants to freeze the existing salary-linked – defined-benefit – schemes, it says it does not intend winding them up and is committed to keep funding them to ensure they can meet their commitments to workers.
Staff can join a new defined-contribution scheme, where contributions are set but the level of payout is not guaranteed.
Under this plan, the company will pay 6 per cent of salary on behalf of workers who do not want to contribute to the new scheme. For those who contribute, Pfizer will match their contributions while also paying the 6 per cent.
So where a worker contributes 5 per cent of their pay, Pfizer will pay 11 per cent. Their pension will be a combination of what they are due from the old defined-benefit scheme and from the new defined-contribution plan.
The company has been negotiating the introduction of the new scheme with workers, who are mainly represented by trade union Siptu, since 2014.
Pfizer bears the full cost of the defined-benefit schemes, as workers do not have to pay into them, which the company said was now rare.
In 2010, the group had to pay an extra €21 million into one of the defined-benefit schemes to ensure that it complied with legal safeguards. It also paid €10 million in Government pension levies between 2011 and 2015.
Seamus Fives, Pfizer’s site lead in Ringaskiddy and Little Island in Cork, where most of the company’s operations are based, warned that the old scheme’s costs had risen 1,000 per cent since 2009 and were hitting the sites’ competitiveness.
“The environment for defined-benefit schemes has become very challenging due to the increasing and unsustainable cost and volatility associated with these types of pension plans,” he said.
“It is important that we remain attractive and competitive within the company manufacturing network to continue to attract manufacturing activity,” Mr Fives added.