The scale of pension contributions the CIÉ Group will have to make in future will increase significantly to unaffordable levels, based on actuarial projections, the chairman of the State-owned transport group has warned the Government.
Aidan Murphy told Minister for Transport Eamon Ryan that the board wanted to transition over time to a single defined-contribution scheme across the group which includes Dublin Bus, Bus Éireann and Irish Rail.
The company in recent weeks has commenced talks to trade unions on pension reforms. It told the Minister the existing two pension schemes in the group had a combined deficit of €371 million last year.
The Irish Times understands that an options paper, considered by the board in September, looked at closing the existing schemes to new members. It also suggested that future pay talks be deferred until pension reforms were implemented or that any rises would be non-pensionable.
The paper was withdrawn subsequently to allow for negotiations with trade unions.
CIÉ Group is worried about the impact of rising staff numbers and unchanged benefit arrangements on its future liabilities. The group employs more than 12,500 people including contractors and there are more than 10,000 active members in the schemes.
The group is also concerned at the implications arising from a recent High Court judgment in relation to the schemes.
At the same time the company and the Government have been coming under strong pressure from retired personnel who argue they are facing falling living standards as their pensions have been frozen for 15 years.
In a letter to trade unions in October the company warned that any change to employer pension costs would “have a significant impact on the CIÉ Group, including on the competitiveness of Dublin Bus and Bus Éireann in the context of direct contracts to run services awarded by the National Transport Authority or any future route tendering arrangements.
It said Irish Rail was also “not immune from having future funding difficulties”.
The CIÉ Group told The Irish Times that the pension liabilities at present at an estimated €2.7 billion were “bigger than the annual turnover of the group of €1.6 billion”.
It said the pension liability risk had come into sharper focus as the solvency obligation rule for both CIÉ pension schemes was now more onerous following the recent High Court judgment in the legal proceedings instituted by the committee of one of schemes – known as the 1951 superannuation scheme.
“Within that engagement, both the CIÉ Group and the trade union group are extremely mindful of the frustration of pensioners across both schemes whose pensions have not been increased since 2008. However, pension increases can only be contemplated if those increases can be sustainably funded by the schemes.”
The CIÉ Group said in a statement that while a representative body for pensioners had a report which concluded, based on certain assumptions, that the CIÉ superannuation scheme could sustain an increase to pensioners of 2.6 per cent annually for the next 10 years, these findings were contradicted in a paper from the scheme actuary. It said that Aon concluded that the 1951 scheme could not sustain pensioner increases.
“Given the contradictory advice, the CIÉ board asked Mercer to independently review both papers and their report was received in May 2024, which concluded that it was “difficult to see how the [CIÉ] board, acting prudently, could consent to the award of discretionary pension increases”.
“Ultimately the board of CIÉ cannot place both schemes in a position where pension increases (which become an immediate ongoing liability of the scheme, and which are largely protected in the event of a scheme wind-up) compromise the funding position of the scheme with respect to its statutory requirements. This would place the accrued benefits of active and deferred members at risk. Increases to pensions in payment cannot be awarded until such a time as the funds have sufficient capacity to bear the increased liability.”
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