The trustees of a CIÉ Group pension scheme which is hundreds of millions of euro in deficit are to ask the High Court for directions on how much the company must pay to plug the funding gap, RTÉ News has learned.
However, CIÉ has rejected suggestions that it alone is responsible for making up a shortfall of almost €800 million for the two schemes covering 10,000 workers in Irish Rail, Dublin Bus and Bus Éireann.
The company says proposed reforms which would see most staff working and contributing to the scheme for longer are essential to preserve the retirement benefits of the staff.
CIÉ Group Chief Executive Lorcan O'Connor said CIÉ had received no notification from the Pensions Committee of trustees for the scheme, and described their proposed High Court move as "extremely unusual".
CIÉ currently has two pension schemes - and according to the 2019 annual report, between them they were in deficit to the tune of €777 million.
The Regular Wages Scheme covering around 7,500 frontline personnel accounted for €340 million of the overall deficit.
Labour Court proposals to address the funding gap and stabilise the scheme - including extending the retirement age from 60 to 63 - are currently being implemented following approval by members.
However, the deficit in the Salaried Employees or "1951" Scheme covering 2,500 senior staff stood at €437 million - representing the majority of the overall shortfall.
CIÉ contributes 27% into the managers' fund, compared to 9% for the Regular Wages Scheme.
"This contribution rate is far higher than the norm and well above the maximum 12% Employer Contribution approved by the Department of Public Expenditure and Reform," said Chief Executive Lorcan O'Connor.
Members of the 1951 scheme are currently voting on a Labour Court recommendation which would increase their general retirement age from 60-63, though CIÉ would still pay a 27% contribution into a defined benefit scheme.
However, the Pension Committee overseeing the scheme has now told members: "In keeping with its fiduciary duties to act in your best interests, having taken legal advice and in the absence of agreement with CIÉ, your Committee intends to apply to the High Court for directions as to the extent of CIÉ's contribution obligation under the 1951 Scheme."
It goes on: "Your Committee's understanding is that CIÉ cannot unilaterally reduce member benefits."
A Pensions Committee source said they needed an interpretation of the rules - and noted that around 500-600 members were not in a union (though union sources put that figure lower at around 400).
Some members believe CIÉ is bound to make up the deficit due to commitments given back in 1994 when a number of older pension schemes were bundled into the 1951 scheme.
However, the CIÉ Group Chief Executive Lorcan O'Connor rejected any suggestion that the company was breaching commitments, saying all such claims had been disproven on numerous occasions.
He said the scheme was now in breach of Pensions Authority rules known as the Minimum Funding Standard, and had missed an Authority deadline of December 2020 for addressing the funding difficulties.
Mr O'Connor said CIÉ had accepted the Labour Court recommendation, which was "...reasonable and fair but takes account of the fact that CIÉ is in a difficult financial position".
He highlighted that CIÉ was currently receiving "hundreds of millions" in state support to address revenue shortfalls triggered by Covid-19 - and could not go to the government seeking further assistance to shore up the pension scheme.
"Leaving the Pensions Authority aside, CIÉ as a group can't simply sit back given the scale of the deficit and the challenges of Covid. We would have to consider what other changes would need to be made as other employers had done, such as closing the scheme, closing it for future accrual, or closing it for new entrants."
The Chief Executive said that if the managerial grades accept the Labour Court recommendation, with members retiring later and contributing to the scheme for longer, it would "bring the minimum funding standard into positive territory".
However, he warned that if they did not, the Pensions Authority could "take the matter out of our hands".
The Pensions Authority acknowledged that it does not have the power to compel anyone to make contributions to a pension scheme.
However, the Pensions Act gives the Authority the power to direct trustees of defined benefit schemes to reduce benefits, or wind up a scheme, where a defined benefit scheme fails to meet the statutory funding standard.
The trustees may also apply for a "Section 50 order" under which accrued benefits relating to members' past service can be reduced.
Union sources acknowledged that the Pensions Committee was entitled to go to the High Court but cautioned that a case could go against them.
They noted that there is no dispute as of now, but that as industrial relations practitioners, their focus would be on the Labour Court recommendation, and change being secured through the IR process.
The union ballot result is due in early May.
