The deficit in CIÉ's defined benefit pension scheme more than halved last year, but still stood at €396.5m at the end of December, down from €846m a year earlier.
In the state transport company's annual report for 2022, Chairperson Fiona Ross said the pension issue is a priority concern as it puts the long-run security of pension provision for the workforce at risk.
She also warns that unless changes are implemented to the 1951 Scheme, it will be closed to new entrants and future accrual.
"Sustainable pension provision is a challenge which is not unique to the CIÉ Group," Ms Ross wrote in the report, published this morning.
"However, the CIÉ Group has one of the largest pension deficits in the State, notwithstanding market movements contributing to an overall reduction in the deficit in 2022. The €396.5m pension deficit at the end of 2022 remains a key component of the weakness in the group's financial position," she added.
During last year, a proposal from the Workplace Relations Commission to address the deficit in the Regular Wages Scheme, which cover 75% of the group’s workforce, was accepted by staff and implemented.
However, a Labour Court recommendation designed to address the deficit in the 1951 Scheme which was accepted by members of the group’s trade unions has not been implemented, due to concerns among the scheme’s committee.
This scheme covers a quarter of CIE’s workforce or around 4,900 people, including management, clerical and executive staff and is the last remaining open and unchanged defined benefit scheme providing a pension of 50% of final salary in the State.
Among the proposed changes is increasing the minimum retirement age from 60 to 63.
CIÉ's current employer contribution rate is 27%, which the company claims is much higher than general norms, but despite this the funding level is not sufficient to fund the level of benefit on a sustainable basis, it says.
"It is disappointing that the Committee of the 1951 Scheme continue to resist changes to the scheme, notwithstanding the ballot result and scale of the problem," said Ms Ross.
"The scale of pension deficit cannot be left unaddressed. Failure to implement the Labour Court Recommendation in a timely fashion will result in otherwise avoidable decisions by the CIÉ Board to close the Scheme to new entrants and future accrual," she added.
The high cost of providing the defined benefit arrangements contributed to a net deficit for the year of €28m, the company said, down from a deficit of €53m in 2021.
Revenues grew by 15% to €1.493 billion, with increasing passenger numbers and commercial revenue, as well as rising Public Service Obligation income driving the growth.
247 million passenger journeys were recorded on the CIÉ services last year, across Dublin Bus, Iarnród Éireann and Bus Éireann.
CIÉ also said it welcomed the big increase in capital investment in public transport from the exchequer, which reached €473m last year.
"2022 represented a year of recovery from the shock caused by the pandemic," said CEO Lorcan O'Connor.
"Steady passenger growth throughout the year saw us exceeding pre pandemic passenger numbers by the end of the year," he said.
"Ireland's recovery in public transport usage has been one of the fastest experienced around the world. We are playing a pivotal role in Ireland’s climate response and supporting a just transition remains a priority for the CIÉ Group," he added.
However, Mr O'Connor also said that notwithstanding the significant achievements in 2022 and the changes made to the Regular Wages Pension Scheme, challenges lie ahead.
"These include the "cloud" over the future of the group caused by the slow progress in resolving the pension deficit for the 1951 Scheme, labour shortages, inflation, ensuring that our cost base and work practices are competitive and ensuring we have sufficient capacity and expertise across the group to deliver the various capital projects we are involved in, on time and on budget," he stated.
"While significant progress was made in addressing the group’s defined benefit pension deficit during 2022, until fully addressed, it remains a cloud over the financial stability of the group," he added.
