The board of AIB has agreed to offer staff in the Republic enhanced pension arrangements

At a board meeting in Dublin yesterday, the bank accepted the recommendations of an independent tribunal, chaired by Kevin Foley, that it should introduce a hybrid defined-benefit/defined-contribution pension scheme.

This new scheme will apply to staff in Ireland who are members of the bank's defined-contribution (DC) scheme, which was set up in January 1998. It will also be open to new staff joining the bank.

Members of the existing defined-benefit (DB) scheme, which closed in December 1997, will be unaffected. About 35 per cent of AIB's 9,500 staff here are members of this scheme.

The Irish Bank Officials' Association (IBOA) said its executive committee would meet on May 30th to discuss the matter, adding that it "welcomed" AIB's decision. "Our executive will meet next week to discuss the [ AIB] board's decision and we will then begin rolling out our communications to members about how this will impact on them and their families," the union said.

The DB scheme would apply to all earnings up to €61,997, equivalent to the top of the pay range for an assistant manager with AIB.

The value of the State pension would be integrated into this calculation.

For earnings above that level, an "enhanced" DC scheme would apply. This would involve a contribution of 10 per cent from AIB for all pay above that level.

In addition, staff would be required to make compulsory contributions of 5 per cent of their pensionable pay. The retirement age has been fixed at 65 and Mr Foley said these measures should be introduced on December 1st.

AIB's move puts pressure on Bank of Ireland, which is in dispute with the IBOA over its decision to close its DB scheme last October and replace it with a new fund offering less certainty on retirement payouts.

The two sides are holding talks under the auspices of the Labour Relations Commission.