ESB pension

WizardDr said:

The legislation (I am told) is that any shortfall in funding was to be made up by the Company AND the employees by agreement.

This does not appear to me to be a DB Scheme on the basis that the employer is not on the hook for the deficit unless and until the Employer agrees. That payment could be 0% to 100% or anywhere in between.

Is it not the case that whatever this creature is - its not DB.

Who advised Mr Ogle?

Any views?

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An employer only has to pay 10% for it to be an employer scheme. They can have a DB scheme which is 90% funded by the employee if they want (I wouldn't expect it to last very long mind!). It has to be documented in the scheme rules. DB schemes are purely employer funded.

TRS30 said:

I live with luck while others live with certainty!

I am angry because our current government want to socialise every debt in this country even to the extent of robbing defined contribution pension funds to pay under funded defined benefit rather then make them take a reduction in benefit.

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There's not that much certainty around DB schemes anymore. The vast majority of them are underfunded and under current legislation, retiree's get priority, meaning current and deferred members get a fraction of their actual benefits.

The current tax on pension schemes is nothing to do with funding DB schemes. They claim it is to pay for the jobs initiative but how they are spending that much money on it is beyond me. I suspect they are spending it on other things too.

The new one that is being introduced in 2014 is in relation to where pension schemes and employers are insolvent. The EU ruled years ago that these employees should have at least 50% of their accrued pensions protected. The Irish government chose to ignore that so they were brought to court and lost. The level will pay for the benefits that are protected under EU law because the employer cannot pay them. Where the employer is still solvent, they are responsible for paying the benefits and will not get any money from the government.

SBarrett said:

DB schemes are purely employer funded.

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That is not my understanding of what a DB scheme is.

A DB scheme is where the benefit is defined. In the vast majority of cases it means that the employee contributions are fixed and that the employer will pay the balance. However this is not a given neither is it a requirement of a DB scheme. Although it must be said that DB schemes are unworkable unless this is the case. However the wording on contributions/funding in the Trust Deed will define how this works.

It seems in the ESB case the deficit has to be agreed to be paid between the employer and employee - hence the deficit is not purely the employers.

In hindsight the rules behind this scheme were drafted at a different time when these problems where not seen.

It's may understanding that this is the issue in the Aer Lingus scheme. There is a defined benefit provided to each member however the contributions are also defined. Hence a defined contribution and defined benefit in one which is a contradiction and where all the problems come from.

Unless the rules clearly say the employer must pay the difference it is open to challenge whether the deficit is actually the employers.

to S Barrett.

From memory that EU legislation was enacted in 2005.
The then (Government) fully knew this, ignored it, were taken to task and lost.

As you state it Means that in an insolvency situation on a Company and their pension scheme that the employees get @ least 50% or @ least k12 ..Again (from memory)d it is tapered so that those on higher pensions get less.

It is a good idea

Lot of comment here. Middle Ireland being hit again, ESB pension in trouble and the company capitulate in the face of threatened strike. In the long term the tax payer is the loser through higher energy bills. I know it may be a hard pill to take but when a pension fund gets into difficulty for whatever reason the company and the members must share the burden equally and not hit the tax payer.

I understand your frustration Ronnieb but these people paid into the fund in good faith and the ESB is a very profitable company so in reality the folks are entitled to their pension rights. We need to forget about the state versus non state argument when it comes to the pension discussion, the issue is very complex, for example, the ESB folks do not have an entitlement to a contributory OAP

I'm sorry but your points are contradictory. The reason the ESB employees are not entitled to state old age pension is because they do not pay the same PRSI as the rest of us. This perk has existed since the foundation of the company and is quiet a saving. Have a look a your own PRSI on your payslip and you'll we what I mean. The bottom line here is that the ESB staff are being treated with kid gloves because of their power (excuse the pun) they hold over the country