MANAGEMENT AT the ESB is expected to tell trade unions next week that the company’s pension fund is facing an estimated deficit of up to €1.5 billion.
It is understood that among the proposals that will be put forward for dealing with the problem is the closure of the existing defined benefit pension scheme for new staff and the introduction of new pension arrangements.
A valuation to determine the exact nature of the pension fund deficit is currently under way.
However, it is understood that estimates suggest that the deficit is between €1.3 billion and €1.5 billion.
Separately, it emerged last night that the chief executive of the ESB, Padraig McManus, is to take a 10 per cent pay cut.
Mr McManus currently has a salary of €467,000 with the possibility of an additional 25 per cent in bonus payments.
Meanwhile, the company is understood to believe that it is neither feasible nor practical to rescind a controversial 3.5 per cent increase in pay awarded to the ESB’s 8,000 staff under the terms of the wage agreement reached last September.
This pay increase has been strongly criticised by Government Ministers over recent days.
Minister for the Environment John Gormley said that there was widespread concern in Government at the increase.
“It is seen as inappropriate and it is seen as sending the wrong signal at this time,” he said.
However The Irish Timesunderstands that the Government was informed of the decision to pay the increases due under the national agreement by the board of the ESB on December 17th last.
It is understood that the Department of Communications, Energy and Natural Resources was briefed on the decision before the money was paid out to staff and that no objection was raised at the time.
It is the norm for decisions of the board of the ESB to be relayed to the Department of Communications, Energy and Natural Resources.
The secretary of the ESB group of unions David Naughton yesterday defended the pay increases paid to staff at the company.
He said that the ESB was a commercial semi-State company and considered to be part of the private sector.
He said that the ESB was a profitable company and that other firms in similar situations had also paid the increases.
Trade unions yesterday strongly criticised the Government over its comments on the ESB pay rise.
The craft union TEEU said that this was the latest step in a deliberate strategy of making ordinary working people pay for the economic crisis created by over a decade of mismanagement of the economy.
TEEU general secretary designate Eamon Devoy said: “The only sin committed by ESB workers is that they accepted a pay increase negotiated through the social partnership process last year.
“If the increase is taken off them it can be taken off every other worker in the country as well. The agreement has an inability-to-pay clause which employers can avail of if justified.”