Bank of Ireland and its unions have agreed a new pension scheme which will resolve a row which led to industrial action earlier this year.
Last October, the bank closed down its guaranteed Defined Benefits Pension Scheme to new entrants, offering them instead a hybrid scheme that transferred part of the risk of future returns to the employee.
The new Life Balance Scheme will consist of two elements.
One of which requires mandatory contributions of 2.5% of their salary to a Defined Benefit Retirement Capital Account.
Staff can also contribute to a Personal Investment Account with the bank matching contributions up to 3% of salaries.
To offset the additional costs for future staff of contributing to a personal investment account, those workers will receive a pay increase of 3% plus additional contributions to their fund.
Staff who have joined since October 2006 will be given one final opportunity to join the existing Defined Benefit Scheme within three months.
Ombudsman welcomes new scheme
Speaking on RTÉ Radio's Morning Ireland, Pensions Ombudsman Paul Kenny said it was an interesting scheme which would be attractive to the members of the Bank of Ireland pensions scheme and he was glad to see it being recommended by unions.
He said the scheme gives the possibility of really good benefits, and one of the significant issues is that there is no integration with the State benefit, which is not taken into account in the calculation of how the scheme is funded.
He predicted that other companies would introduce similar models.
Bank of Ireland has undertaken that the guaranteed pension scheme will not be downgraded in any way if the new scheme for new staff is accepted.
The bank says a person joining at 20 and working until they are 65 could retire on two-thirds of their final salary plus the social welfare pension.
The scheme will be reviewed every five years. The current scheme provides retirement benefit of two-thirds of final salary based on contributions of 2.5% of salary.
Full details of the scheme will be revealed tomorrow morning and the Irish Bank Officials' Association and AMICUS are expected to recommend the deal for acceptance.
