Attempts to deal with CIÉ pension scheme dispute rebuffed, court told

Committee members accused of having an ulterior purpose

Córas Iompair Éireann (CIÉ) rebuffed “out of hand” attempts by committee members of one of its two principal pension schemes to address through non-adversarial means their concerns about the company’s moves to secure the scheme’s solvency, the High Court has heard.

Kelley Smith SC, for the eight pension committee members, said her clients were accused by CIÉ of having an ulterior purpose and of being “strategic” in applying to the court for a ruling on how to interpret one of the pension scheme’s rules.

There has been “fierce” correspondence between the parties, with CIÉ being “obstructive and generally difficult” in how it engaged with the plaintiffs, she added.

Ms Smith pointed to the committee’s fiduciary duties, including ensuring that assets are preserved and obligations under the scheme’s rules are met.


Retirement age

The scheme, set up in 1951, has some 4,900 members, including 2,250 current pensioners, the court heard. It covers primarily supervisory, technical, administrative, and managerial staff, and the proposed changes include increasing the minimum retirement age from 60 to 63.

Ms Smith said the case focuses on the legal interpretation of rule 20 of the scheme, which relates to the employer’s obligations “to support and maintain the solvency of the fund”.

The committee members, who are responsible for the scheme’s management and registration, are asking the High Court to determine whether the board’s obligations under rule 20 are compatible with reductions to scheme members’ benefits. They also want clarification as to whether the board’s obligations under the rule require that contributions must, at a minimum, satisfy the statutory funding standard.

It is the committee’s position that the proposal to reduce members’ benefits appears to be incompatible with the board’s rule 20 obligations to contribute every year to the pension fund a sum deemed to be necessary to support and maintain its solvency.

Wide discretion

Ms Smith said CIÉ will argue this rule gives it wide discretion to choose the measures it deploys to obtain solvency. CIÉ says, among other things, that it is satisfied it has conformed fully with the scheme’s requirements.

The 1951 superannuation scheme was fully funded to the relevant statutory standard until 2008 when it was in deficit. After that, a funding proposal was devised but, by 2017, it was off track again. In December 2020, it had a funding deficit of €151 million, according to CIÉ.

Due to the solvency position, the Pensions Authority told the scheme’s trustees and pensions committee it was considering using a provision under law to reduce scheme benefits or to wind it up.

Negotiations followed between CIÉ and the group of trade unions in the company. The Labour Court issued a recommendation that member benefit reductions should be achieved by increasing the pension age. The unions voted to accept it by 54 per cent to 46 per cent.

The CIÉ board then informed the pension committee it had started a statutory process to implement changes to the scheme to bring it into compliance with minimum funding standard requirements of the Pensions Act 1990 and that, therefore, a funding proposal would not be required.

However, the committee says it has not been furnished with the proposed amendments to the scheme.

CIÉ says the committee’s motivation in bringing the legal proceedings is due to a perceived failure by the Pensions Authority to offer what it says is “comfort” to the committee.

The benefits available to members will remain generous by reference to corresponding benefits in other public sector schemes, it submits. Further, it says the increase in the retirement age to 63 is “modest” compared to other schemes.

The case continues on Wednesday before Mr Justice Mark Sanfey.

Ellen O'Riordan

Ellen O'Riordan

Ellen O'Riordan is an Irish Times reporter