Taoiseach Bertie Ahern raised the stakes yesterday in the row over Bank of Ireland's decision to amend its pension arrangements for new staff. Speaking at a Labour Relations Commission conference, Mr Ahern stated the "practice of some companies of reducing pension benefits is a tension point for workers".

"It is not an issue where people can just roll over entitlements to workers," he said. Though careful not to mention companies by name, the Taoiseach said he did not think very profitable companies could argue that pension issues were affecting their viability.

His intervention came as Bank of Ireland and the Irish Bank Officials Association (IBOA) made submissions to the Labour Court on the dispute.

A review of the new scheme by Farrell Grant Sparks (FGS) said the bank's existing staff pension scheme was fully funded and the introduction of a new scheme was not justified. The review, commissioned by the IBOA, found the pension fund was in surplus with a funding of 108 per cent.

From October 1st, the bank closed off its defined benefit scheme to all new staff and instead offered them a new "hybrid" defined contribution pension. "All this is about is one of the most profitable companies in Ireland taking away staff pensions to maximise short-term profits," said IBOA general secretary Larry Broderick.

The IBOA told the Labour Court that Bank of Ireland's new scheme would result in significant cost savings for the bank, did not provide the same benefits as the existing defined benefit scheme and would entail new staff having to make higher pension contributions than existing staff.

According to the FGS report, employee contributions under the new scheme would need to be around 120 per cent greater than under the current scheme.

Employees would have to contribute 5.5 per cent of salary to target pensions amounting to two-thirds of final salary compared to the 2.5 per cent employee contribution required of existing employees to guarantee that level of pension.

Even at that, there is no guarantee that the new employees would receive pensions of two-thirds final salary, FGS said.

Mr Broderick said Bank of Ireland was using International Financial Reporting Standards (IFRS) to force through a far weaker pension for new staff.

The FGS review found that the impact of the bank's changeover to IFRS, including pension accounting, was not significant in the context of the bank's overall financial standing.

"There is no apparent need to change the nature of the pension based on the current financial position of the business," it said.

The IBOA also said that the bank's decision to unilaterally implement the new pension proposals was in breach of existing negotiating procedures.

A Bank of Ireland spokesman said there was a clear and compelling need for future change to its pension arrangements.