ESB workers are likely to begin legal action against the State-owned energy company within days as the row over a €1.6 billion shortfall in their pension pot deepened yesterday.
It has also emerged that the scheme’s trustees wrote to the company expressing concern about proposals to pay the Government a special dividend of €400 million in light of the fund’s problems.
The State company’s pension plan has liabilities of more than €5 billion but assets of around €3.5 billion, a shortfall that would leave current employees with just 3 per cent of their salary if it were wound up, effectively wiping out their investment.
Dividend
Four workers have pledged to take court action to halt the payment of both a €78 million dividend, approved by the company at its annual general meeting yesterday, and the special dividend, which will be made next year following the planned sale of some of its power plants.
Speaking at a protest outside the ESB’s HQ in Dublin yesterday, one of the four, Owen Kilmurray, said that they would “definitely” proceed with their legal action if it approved the €78 million dividend.
The company confirmed that the meeting did approve the dividend, and it is understood that the four, Mr Kilmurray and his colleagues, Brian Baitson, William Flavin and Margaret O’Connor, will issue a plenary summons, officially beginning their legal action against the company, within days.
They argue that the dividend approved at yesterday’s agm is unlawful as the company’s accounts for 2012 fail to provide for the pension shortfall.
The ESB’s annual report describes the scheme as a defined contribution plan, which means that the company believes it is not liable for any shortfall.
Shortfall
A letter from their lawyers, Dublin firm Byrne Wallace, to the company warns that they will seek the repayment of any dividend to the company and orders demanding that the ESB take steps to deal with the shortfall.
Addressing yesterday's demonstration, Brendan Ogle, head of the ESB's group of unions, said that workers would take any necessary "legal, political and industrial action" to protect their pension fund's assets.
Mr Ogle told the gathering, organised by a workers’ group, Concerned ESB Active Pension Fund Members, that the plan to sell some of the group’s stakes in power plants in Spain and Britain as well as some Irish facilities, to fund the special dividend, meant that the Government, the ESB’s owner, was stripping assets that could be used to underpin the fund.
It is understood that the scheme’s trustees, chaired by Tony Donnelly, have written to the company expressing their concern about this plan.
Liabilities
The shortfall is based on the minimum funding standard laid down by the Pensions Board, which calculates a scheme's liabilities in the event of it being wound up.
The ESB says the scheme’s actuaries have confirmed that it has the funds to meet its liabilities as they fall due.
