The Pensions Authority repeated a warning to State-owned transport company CIÉ earlier this month that it could be prosecuted for failing to submit a funding proposal for one of its pension schemes, which had a deficit of about €550 million at the end of last year.
The Irish Times reported in April that the Pensions Authority had warned it could wind up the scheme or reduce benefits unless steps were taken within the next few weeks to address the deficit.
In May, CIÉ signalled that it was moving to implement proposed changes to the pension scheme to deal with its deficit
In early July, the authority sought information from the transport group in relation to the CIÉ 1951 Superannuation Scheme, before deciding if it should exercise its powers under the Pensions Act.
In a letter dated August 3rd, Pensions Regulator Brendan Kennedy noted that CIÉ had failed to respond to that request for information, and set a new deadline of August 11th for it to be furnished.
“Failure to furnish the required information in full within the timeframe specified is a breach of the Act and is liable to prosecution,” Mr Kennedy warned CIÉ, adding that such a move could be initiated “without further notice”.
Prosecution could lead to a fine of up to €25,000 and up to two years in prison, the letter noted.
When asked if CIÉ had responded to the authority by the deadline, a spokesman said: “CIÉ confirms that it responded yesterday [Wednesday] to correspondence from the Pensions Authority, with the requested information in support of CIÉ’s request that the authority should forbear in the exercise of its powers under section 50/50B of the Act.
“This would facilitate the statutory process under the Transport Act 1950 (as amended) whereby CIÉ intends to submit to the Minister an amending superannuation scheme.”
The Pensions Authority declined to comment on the standoff with CIÉ.
Statutory process
In a letter dated June 11th, CIÉ told the authority that as part of a statutory process under the Transport Act 1950 it intended to submit to the Minister for Transport an amending superannuation scheme and hoped that such changes would be implemented by the end of October this year.
CIÉ has indicated to the authority that changes to the scheme via the Transport Act process would enable it to satisfy the funding standard requirements, and asked for forbearance from the authority in exercising powers around members’ benefits covered by sections 50/50B of the Pensions Act.
The authority has sought clarification from CIÉ on whether it believes that the company and the Minister can amend the scheme rules to reduce benefits by changing the normal pensionable age without complying with a regulation of the Pensions Act around the preservation of benefits.
CIÉ appears to have told the authority that its correspondence with the Minister was legally privileged, and it therefore could not engage on these issues.
Mr Kennedy also told CIÉ that in the “interests of transparency” it would not be “appropriate at this time to accept the offer to meet with CIÉ to discuss matters on a strictly confidential basis”.
The 1951 managerial scheme has about 2,200 members and is one of two pension funds operated by CIÉ that were in deficit to a combined €975 million at the end of last year.
While the obligation to submit revised funding proposals rests with the committee of the 1951 scheme, CIÉ is the fund’s sponsor and a key player in resolving the deficit issue.
The 1951 scheme at CIÉ is a defined-benefit arrangement and, based on 40 years’ service, the pension payment 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 actual average age of retirement is 63.5 years.
At present the employer contributes about 28 per cent and the employee about 8 per cent.
