The Pensions Authority has warned the trustees of a CIE pension scheme that they could face prosecution if they fail to submit a funding proposal to address the deficit in the scheme by 22nd June.

It has also told them that it is considering using its statutory powers to unilaterally cut members' benefits under the scheme if a proposal is not received within that eight week period.

Last week, CIE Group Chair Fiona Ross told an Oireachtas Committee that its total pension deficit across both schemes stood at €975 million at the end of last year, putting both staff pension provision and the Group's financial position at risk.

A previous Pensions Authority deadline to submit a funding proposal was missed.

CIE operates two schemes for its 10,000 staff: the Regular Wages Scheme covering frontine staff, and the "1951" Salaried Workers Scheme which covers clerical, administrative and managerial personnel.

A Labour Court proposal to address the deficit in the Regular Wages Scheme - including pushing out the retirement age from 60 to 63 - was accepted by members in a ballot.

Members of the 1951 scheme will return the result of their ballot on similar proposals this Tuesday.

However, in the meantime, the 1951 trustees have now sought High Court directions as to whether the company should carry the liability for the deficit based on arrangements dating from 1994 when a number of company schemes were amalgamated - rather than a scenario where members' benefits are reduced.

In a letter dated 27th April 2021 to the Trustees and Pensions Committee of the 1951 scheme headed "Failure to submit a funding proposal under section 49 of the Act", Pensions Regulator Brendan Kennedy
cites the Authority's letter dated 10th January notifying trustees that it was considering whether to commence the statutory process under Section 50 and Section 50B of the Act unless it received a positive Actuarial Funding Certificate and positive Funding Standard Reserve Certificate, or a valid funding proposal, within 8 weeks.

Mr Kennedy notes that the Authority has not received any of these, and that the 1951 scheme remains "noncompliant" with the Act - so it is now considering using its powers to make a direction reducing benefits under the scheme, or to wind it up.

He gives the trustees until 22nd June (8 weeks) to submit the appropriate documentation or funding proposal.

"You should note that failure to furnish the required information in full within the time specified is a breach of the Act and a criminal offence for which you may be prosecuted," he confirms.

CIÉ confirmed to RTE that it has received correspondence from the Pensions Authority on potential actions by the Authority relating to the 1951 Scheme under Section 50 / 50b of the Pensions Act.

"In the first instance, the Company awaits the outcome of a trade union ballot on proposals recommended by the Labour Court, and accepted by the Company, which will be concluded next week," a spokesman said.

The Pensions Authority does not have the power to compel anyone to make contributions to a pension scheme.

However, where defined benefit schemes fail to meet the statutory funding standard, the Pensions Authority has the legal power to direct trustees of a defined benefit scheme to reduce benefits under a "Section 50" order, or to wind it up.

Under such an order, accrued benefits relating to members' past service can be reduced.

However, members must be notified in advance of any proposed reductions, and have one month to make written observations.

The trustees must consider these observations before making an application to the Pensions Authority.

If the Authority proposes to issue a direction under Section 50 or Section 50B, all scheme members -including retirees, current and former employees - must be afforded an opportunity to make submissions to it.

"The Authority strongly encourages trustees of such schemes to accelerate their own efforts to find a solution to their funding deficit without Authority intervention," it warns.