Plans by publisher Independent News and Media (INM) to wind up its pension scheme are not justified on legal or moral grounds, the company has been told.
In communications with the company, the scheme’s trustees are understood to have argued that, given the current financial position of the company, there is no legal or moral justification for the closure of the defined-benefit scheme.
The trustees have expressed dismay at the company reneging, as they see it, on an earlier agreement made with INM and the Pensions Authority in 2013.
In March, INM reported an operating profit for 2015 of €37.4 million on revenue of €321.2 million.
However, in common with many companies, INM’s defined-benefit pension scheme has been struggling, in the face of poor investment returns and rising demands on funds, to meet funding requirements that are set by law.
The defined-benefit pension scheme of The Irish Times Ltd was wound up in 2015, on the recommendation of the trustees and by agreement with staff who voted in support of the move.
Funding shortfall
In the case of the INM scheme, the company says there is a funding shortfall of €23 million, based on the funding standard set out in the Pensions Act.
However, staff at INM, and former staff who have deferred taking their pensions until retirement age, point out that a move to reduce the capital structure of INM’s business, which the company is proposing to do in parallel with winding up the pension scheme, will yield shareholders an exceptional gain of €24.7 million.
In the case of the largest of them, Denis O’Brien, it would amount to a windfall of more than €8 million.
According to sources, the pension scheme trustees have told the company they find it inconceivable that the company would position itself to pay a dividend without first resolving the pension issue.
The trustees say they are disappointed at the decision and also at not being given an opportunity to discuss the proposals.
The trustees have called on the company to make an exceptional contribution to the pension scheme of €12 million to bolster the pensions of those employees closest to their retirement date and increase the value of the transfer of funds the company proposes to make to all other employees.
The company says existing pensioners will have their pensions secured by a life assurance company. It plans to hold an emergency general meeting (EGM) on Monday to approve the restructuring, a meeting likely to be lobbied by the National Union of Journalists and former staffers with deferred pensions.
Any capital restructuring decided at the EGM will also have to be approved by the High Court.
