Pension cut at ‘Independent’ a ‘new low in corporate behaviour’

Plans by Independent News and Media (INM) to change its company pension rules, which could lead to sharp cuts for hundreds of ex-staff, are "a new low in corporate behaviour", the general secretary of the Irish Congress of Trade Unions has said.

"My own view is that corporate Ireland should call this out," said Patricia King, citing how business opinion in Britain rounded on Sir Philip Green after he sold BHS (British Home Stores) for £1, but with a £571 million pension deficit.

Ms King said the pension fund trustees should go to the High Court when INM seeks approval for the company's financial restructuring, expected on Monday afternoon.

The trustees should make the court “aware of the consequences of what is proposed – the very negative consequences for human beings who have made the company what it is today”, she said.

“I would be fairly confident that the trustees would get some sort of hearing in the High Court and that would put them in a better position with the company and is something that should be strongly considered.”

A meeting organised by the National Union of Journalists (NUJ) on Monday heard calls for the Government to intervene in INM's attempt to buy Celtic Media Group (CMG) as a means of examining INM's corporate governance.

Reduction of 70 per cent

The union is involved with Siptu in a campaign aimed at preventing INM’s withdrawal from a 2013 agreement to fund the company pension scheme. Without the agreement, the scheme will have to be wound up by its trustees.

Under the 2013 agreement, former staff faced a reduction of 40 per cent in their pensions. If the scheme now has to fold, pensioners face a further reduction of about 30 per cent of their remaining pension.

Around 400 pensioners, most of whom have deferred taking their pensions until they reach the age of 66, are affected. Many of them are lower paid, female former clerical workers with INM.

Later on Monday, INM shareholders will vote at an Extraordinary General Meeting (EGM) on a proposal to restructure the company’s finances. One effect of this would be to allow a dividend to be paid to shareholders.

The company’s withdrawal from the pension scheme will add some €24 million to INM’s balance sheet.

INM has some €60 million in cash reserves and is projected to have over €80 million in cash at the end of the year. Despite this, the company has said it will no longer put any money into its existing defined benefit pension schemes.

“There has been a suspicious silence from the powers that be in Government to the closure of such a scheme,” said NUJ Irish secretary Séamus Dooley at his union’s branch meeting.

“I think that it is the nature of the company and the ownership of the company that has influenced that.”

Expert panel

He and other speakers urged Minister for Communications Denis Naughten to refer the bid for CMG to an expert panel, which he has the power to do. Such a panel should examine what is happening over pensions and also the aborted sale of loss-making Newstalk radio station, owned by Denis O'Brien Communicorp Group, to INM in which Mr O'Brien is a 29 per cent shareholder.

The aborted sale saw a falling out in INM between the company chairman, Leslie Buckley, who is a close and long-standing business associate of Denis O'Brien, and chief executive officer, Robert Pitt.

It is believed that one valuation of Newstalk championed by Mr Buckley had valued Newstalk at between €10 million and €20 million more than a valuation obtained by Mr Pitt.

Any purchase of Newstalk by INM would be directly beneficial to Mr O’Brien whereas an INM share dividend would be dispersed among all shareholders.

"This decision is just unbelievably shocking. My pension represented my life savings," said Martin Fitzpatrick, a former financial journalist with The Sunday Independent.

He said the obligation of the pension trustees was to act in the interest of the members of the scheme and not the company. In this regard, Mr Dooley said he was reassured that the chairman of the trustees, Michael Doorly, who is also company secretary at INM, was acting in the members' interests.

Mr Doorly wrote to INM last week saying there was no legal or moral justification for refusing to fund the pension scheme.

NUJ and Siptu deferred pensioners held a protest outside the shareholders’ EGM on Monday afternoon and those who are shareholders will attempt to raise the pensions issue during the meeting.