Córas Iompair Éireann (CIÉ) has said the combined €853 million hole in its group pension schemes remained a “key component of the weakness” in its financial position last year.
Revenues at the State-owned transport company — which operates the Bus Éireann, Iarnród Éireann and Dublin Bus networks — climbed by €103 million last year from almost €1.2 billion in 2020 to €1.3 billion, CIÉ said, in its latest annual report, published on Friday.
This included an extra €60 million in schools revenue, which the company said was due to the delivery of additional services to provide 50 per cent social distancing to comply with public health guidelines.
CIÉ also received an extra €275 million in State funding last year, up €57 million on 2020, “driven largely by the continued and welcome support from the Employment Wage Subsidy Scheme (EWSS)”, said group chief financial officer Fiona O’Shea in the report.
However, the group posted an after-tax loss of almost €53 million for the 2021 financial year, down from nearly €67 million in 2020, when its operations were largely curtailed by the pandemic.
Operating costs across the group jumped almost €92 million, or nearly 7.5 per cent, to €1.3 billion in 2021, due to the provision of more services last year than in 2020.
The €92 million figure includes €16 million in additional pension costs. CIÉ said in the report that the “imputed finance cost” of carrying its large, €853 million net pension liability, combined with the cash cost of its pension scheme, has increased from a total of €96 million in 2020 to €112 million in 2021.
The company said this reflected the higher cost of providing defined pension benefits in a low interest rate environment.
CIÉ operates two pension schemes: one for frontline staff and another, set up in 1951, for employees with 40 years’ service. A defined-benefit arrangement, the so-called 1951 scheme, involves 50 per cent of final salary and a lump sum of 1½ years’ pay.
Members can retire at 60, although they can continue to accrue service up to age 66.
The scheme has, however, been a subject of controversy in recent years. Covering about a quarter of its workforce, the 1951 scheme represents more than half of the group’s total pension deficit, CIÉ said in its latest annual report, and efforts to deal with the shortfall in recent years have been unsuccessful.
A Labour Court recommendation that member benefit reductions should be achieved by increasing the pension age was accepted by CIÉ unions in 2021 by 54 per cent to 46 per cent, but has been challenged by the scheme’s committee members in the High Court.
In the 2021 report, CIÉ chairwoman Fiona Ross said: “It is disappointing that the committee of the 1951 Scheme continue to resist changes to the scheme, notwithstanding the ballot result.
“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 in respect of pension provision.”
