Trade union Mandate has warned that about 600 current and former workers at retailer Arnotts face losing up to half of their pension pots if the defined-benefit scheme is wound up.
This comes after Arnotts informed trustees in June that the company would cease funding for the scheme from the end of this year.
Mandate has sent letters to Irish Bank Resolution Corporation chairman Alan Dukes and chief executive Mike Aynsley, as well as Minister for Finance Michael Noonan, Minister for Jobs Richard Bruton and Minister for Social Protection Joan Burton.
IBRC and Ulster Bank took control of Arnotts in 2010 following a debt-restructuring deal and appointed US group Palladin Capital to manage the business.
Alternative ‘still available’
Mandate general secretary John Douglas said Arnotts’ decision to cease funding to the scheme was “pre-emptive” and claimed that an alternative to the move was “still available”.
According to an analysis of the pension scheme by Mandate, it has a deficit of €25 million. Mandate said the scheme had assets of €125 million and liabilities of €150 million.
Mr Douglas said Arnotts had advised Mandate that they were not in a position to fund the €25 million deficit via lump sums or increased pension contributions. A proposal to wind up the scheme will be considered at a trustees’ meeting on December 7th, he added.
“The impact of winding up the Arnotts pension scheme now would be twofold,” Mr Douglas said.
“Firstly, the assets of the scheme would be realised to secure the pensions of the 300 people currently on pensions – this is likely to cost in the region of €100 million.
“The remaining assets would then be divided between the 300 current staff and 300 former employees in the scheme to calculate a transfer value. Based on current calculations, they will suffer a very significant ‘haircut’ . . . and our advisers estimate that this loss could be as much as 50 per cent.”
Arnotts statement
In a statement released to The Irish Times, Arnotts said the fund’s difficulties were a “consequence of the general state of the investment markets”.
Arnotts said the trustees and their advisers were considering several options for the scheme and that no final decision on its future had yet been made.
“The legislative and economic realities for the scheme are such that any undue delay in those decisions risks the existing situation deteriorating further,” it added.
Arnotts said it had been in “extensive dialogue” with Mandate on the pension issue since early 2010 and that the union was asked to set out its proposals.
“The trustees have undertaken to take on board their concerns and also possible solutions before reaching a decision as to how best to proceed. To date nothing has been forthcoming.”
A spokeswoman for IBRC said it had no comment to make on the matter.
