PENSION FUND:
The situation regarding our pension fund at this stage is certainly a very bleak one. Essentially there are two issues which should be of major concern.
CONTINUING LOSS OF SALARY INDEXATION: Apart from national wage indexation the last ESB category salary indexation increase was 8 years ago in 2001. since then there has been a raft of non-pensionable category salary increases, the latest deal negotiated, again provides for further rationalization of the company and “downsizing” of staff categories, in some cases of up to 25%, will be paid for by way of lump-sum payments only. In the face of the company position to reject pensionable increases in salary the new category agreements has effectively sold out on the principle of salary indexation. This is of course a disastrous development as it completely undermines the principle and guarantee that (quote) “Adjustments of pensions are granted in accordance with the arrangements approved by the Govt. for Public Service Pensions”, i.e., SALARY INDEXATION.
“In the case of the majority of pensioners, pensions are adjusted in line with the salaries of serving staff in the ESB” (source —
That guarantee was particularly hard fought for and hard won by successive generations of ESB staff. Perversely, current staff will suffer most as a consequence of acceptance of non-pensionable salary increases their level of pensionable salary will have been so eroded as to mean that potentially their final pensionable salary could be reduced by as much as 75%.
Against the background of unprecedented profits in 2007 and the payments of dividend to Govt. together with the further payment of 300m.Euro out of profits, the company stance is unacceptable and it’s high time that staff and pensioners voiced, with effect, such opinion to the company.
PENSION FUND LOSSES €1,300,000,000!
As I write, our fund has accumulated losses on its investments in the region of 35%.
WHAT HAPPENS THIS TIME?
The resolve of the staff, pensioners and our Trade Unions will be severally tested. Defined Benefit Pension Schemes such as ESB enjoy, are being closed “at a rate of knots” in industry generally. The protection of Pensioners, staff and their family’s entitlements to all of the benefits of our Defined Benefit Scheme is paramount. I have no doubt that a company “smoke screen” will in a relatively short time attempt to offload liability and responsibility to pensioners and staff. This is a well established precedent for “what happens next”. In probably the most shameful episode ever, during the course of a “Mexican stand-off’ related to the issue of a previous deficit funding row, our pensioners were advised that their pension entitlement could not be paid. In the consequent furore a “sticking plaster solution” was concocted. This time round I believe the solution and responsibility has to be laid firmly at the ESB’s front door. Forewarned is forearmed.
The regulatory authority for pensions in Ireland is An Bord Pensean — The Pensions Board. The essential responsibility of The Pensions Board is to ensure “that occupational pension scheme member’s rights are fully safeguarded and that they and their dependents ultimately receive the pensions which they have earned”.
In this regard The Pensions Board with regard to a Defined Benefit Pension Scheme determines that “as well as defining benefits, these schemes usually define the amount of the contribution (if any) the member will pay. What is not defined is the final cost to the employer. This will depend on a great many things which are subject to change — the future behaviour of salaries, investment returns and survival and mortality patterns among members.
MEDICAL PROVIDENT FUND:
You will be aware of the ongoing controversy concerning “community rating”. Essentially community rating provides for the equitable funding of Medical Insurance
such as M.P.F. This principle supported by the State was challenged by the new Health Insurers (BUPA, Quinn Direct etc.) in the supreme court and determined that such as community rating should not be sustained, effectively unraveling the funding structures of our funds and inevitably leading to unsustainable increased costs to older members. As a “short term” measure Govt. have introduced a new tax and levy proposal which would, in a nutshell, restore an element of equilibrium in the funding costs particularly to older people. Sadly I have to report that members of the ESB M.P.F are excluded from benefiting from this arrangement. Currently we are lobbying against the exclusion decision, in the event of our being unsuccessful I believe we are witnessing the possibility of the demise of our fund as we know it. Inevitably the cost of funding the increased costs for the membership will be unsustainable.
The Govt. has to be held accountable for the decision to discriminate against ESB staff, pensioners and their families. ESB, the company, has to stand behind the retention of this medical insurance benefit for its staff, current and former. Without the forthright leadership and resolve of our representatives, beyond a shadow of doubt we will forever stand accused of allowing the most important benefits, our pension and med. Prov. Funds, to be lost to this and future generations of ESB staff.
There is a challenge now emerging that I hope takes precedence over any other agendas. I would appeal to the Pensioner’s Assoc. and the Trade Union leadership to afford the agenda of the survival of the Pensions and M.P.F their absolute priority.
If our representatives are to offer any rational for their existence the successful challenge of the threats to our Pension and Medical Insurance schemes must surely be their priority.
Kind regards,
_ Joe LaCumbre – Elected Trustee of the Superannuation Fund
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KEEP ON TAKING THE TABLETS (while you can still afford it).!!!
