The State-owned CIÉ transport group has said a pension scheme it operates for management and administrative staff is facing a deficit of about €200 million.
CIÉ has told politicians that a separate pension scheme for front-line and operative staff was last year estimated to be facing a deficit of about €10 million.
The CIÉ group – which comprises Irish Rail, Dublin Bus and Bus Éireann – told members of the Oireachtas this week in a briefing note that both pension schemes were certified as "off track" at the end of 2016 on programmes agreed with the pensions regulator to restore the schemes to financial health. It expects to remain off track as at December 31st, 2017.
The company said this gave rise to a requirement to submit revised funding proposals to the Pensions Authority.
“Off-track certification arose primarily as a result of historically low bond yields and the reintroduction of pay awards, which were deemed to be pensionable in 2016,” the group said.
“CIÉ’s policy is to seek to effect the changes necessary to develop a revised funding proposal in agreement with its employees. Based on advice, the position of the board of CIÉ is that contributions alone, both board and member, (bearing in mind that the board’s contribution is currently close to the stipulated maximums already) will not be sufficient to address the challenges the schemes face.”
Two schemes
The two pension schemes operated for staff in the group are the 1951 superannuation scheme (known as the 51 scheme) and the regular wages scheme (RWS).
The briefing note said about 2,100 active members were employed across the group in the 51 scheme and the average pensionable salary was €58,561.
Based on 40 years’ pensionable salary, it said the main benefits provided under the scheme were: a maximum pension of 50 per cent of final salary; a maximum lump sum of 150 per cent of final salary; a normal retirement age of 60, although members may continue to accrue service to age 66; and an average employee contribution of 7.5 per cent.
CIÉ said there were about 6,500 staff across the group covered by the RWS scheme with an average pensionable salary of €36,273.
The the main features under this scheme, based on service in excess of 10 years, were : 20 per cent of final basic salary; a maximum lump sum of one times final basic salary; a normal retirement age of 65, although members may continue to accrue service to age 66; and an average employee contribution of 3.5 per cent of basic salary.
Under new reform proposals, CIÉ said the 51 scheme would be closed to new entrants and a new funding mechanism agreed for those currently covered by it.
The retirement age would be changed on a phased basis over 10 years, to 66 and the purchase of in-scheme notional service – which is “causing a strain on core member benefits of circa €8 million per annum” – would cease.
For the RWS scheme, CIÉ said “actual retirement experience in the scheme would be reflected in the actuarial assumptions, thereby improving the solvency of this scheme by circa €100million”.
It proposed that pensionable salaries would be capped at 3.3 times’ State benefit “or current pensionable salary at date of implementation”. A defined-contribution scheme for pensionable salary amounts in excess of this cap would be put in place.
