Pension move by Irish Life is hugely symbolic

WHEN the largest pension provider in the State is closing its staff pension scheme, you know there’s a problem.

The move by Irish Life will prompt fears that traditional defined benefit plans are now set to disappear from the private sector.

Unions at Irish Life want the law altered urgently to stop the company closing its defined benefit pension for staff. Some 1,200 staff members will be hit by the move. Apart from the livelihoods of the staff involved, the action of a company with such expertise in the area of pensions is hugely symbolic – and a wake up call for the rest of the sector.

The Irish Life scheme has a €150m surplus, which is unusual for a private sector defined benefit scheme.

The scheme has 2,200 pensioners and former employees yet to reach retirement age, or deferred members.

A briefing document, compiled by the Unite trade union, says the scheme has assets of €1bn, and comfortably meets the minimum funding standard.

However, defined benefit pensions are now being phased out across the private sector. Before Christmas there were protests when the publisher of this newspaper, Independent News & Media (INM), said it was shutting its defined benefit scheme. Intel, Pfizer, Aer Lingus, and the Dublin Airport Authority are among companies closing defined benefit schemes.

From a peak of 1,500 defined benefit schemes a few years ago, covering 300,000 people, there are now just 715 plans with 100,000 active members.

The trend is continuing across the sector. The Government must decide if it is going to let it happen or actually put a plan in place.