Restructuring Defined Benefit Pension via Industrial Relations - - PowerPoint PPT Presentation

▶
restructuring defined benefit pension via industrial
SMART_READER_LITE
LIVE PREVIEW

Restructuring Defined Benefit Pension via Industrial Relations - - PowerPoint PPT Presentation

Mar 01, 2023 379 likes •545 views

Restructuring Defined Benefit Pension via Industrial Relations Agreement - eircom case study IAPF Annual Conference : 13 th October 2010 www.iapf.ie eircom Case Study IAS 19 & Trustee ongoing Funding deficits remediated by Collective

slide-1
SLIDE 1

IAPF Annual Conference : 13th October 2010 www.iapf.ie

Restructuring Defined Benefit Pension via Industrial Relations Agreement

  • eircom case study
slide-2
SLIDE 2

IAPF Annual Conference : 13th October 2010 www.iapf.ie

eircom Case Study

  • IAS 19 & Trustee ongoing Funding deficits remediated by

Collective Agreement with Trade Union Alliance

  • Agreement on nature of future pay increases including

limits on pensionability

  • No change to Trust Deed or Rules
  • No Trustee or Pensions Board consents required
  • Ballot by the four eircom Trade Unions resulted in 86% to

96% favourable result

slide-3
SLIDE 3

IAPF Annual Conference : 13th October 2010 www.iapf.ie

Key Parties to Agreement

Trade Union Alliance

Scheme Trustees

  • Main Fund (post ’84 service)
  • No 2 Fund – (pre ’84 service)

IR Negotiation Consultation

slide-4
SLIDE 4

IAPF Annual Conference : 13th October 2010 www.iapf.ie

Main Fund Demographics

  • Average age of active members

= 50.5

  • Average age of deferred members = 51.3

March 2010 Active Membership = 29% of total

5,902 6,505 5,269 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Active Members Deferred Members Benefits in payment

slide-5
SLIDE 5

IAPF Annual Conference : 13th October 2010 www.iapf.ie

Main Fund Demographics

1,374 1,043 5,902 6,505 5,269 14,283 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Active Members Deferred Members Benefits in payment Mar-10 Projected 2022

Projected Active membership in 2022 = 8% of total

slide-6
SLIDE 6

IAPF Annual Conference : 13th October 2010 www.iapf.ie

261 327 369 430 489 690 767 889 793 877 931 1085 998 767 509 279 190 95 94 72 49 66 57 67 60 74 78 97 67 82 67 47 41 29 9 4 1 1 200 400 600 800 1000 1200 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2047

Active + Deferred Members reaching age 60 by year

slide-7
SLIDE 7

IAPF Annual Conference : 13th October 2010 www.iapf.ie

Extended periods for pensions in payment

Male Female Male Female 30-Sep-07 85.7 88.8 86.8 89.8 31 March '05 84.0 87.0 85.2 88.2 31 March '02 81.0 85.1 81.6 85.9 21 Dec '98 80.3 84.3 81.0 85.1 Future Retirees Current Retirees

Life Expectancy

Male Female Male Female 30-Sep-07 85.7 88.8 86.8 89.8 31 March '05 84.0 87.0 85.2 88.2 31 March '02 81.0 85.1 81.6 85.9 21 Dec '98 80.3 84.3 81.0 85.1 Future Retirees Current Retirees

Life Expectancy

Male Female Male Female 30-Sep-07 85.7 88.8 86.8 89.8 31 March '05 84.0 87.0 85.2 88.2 31 March '02 81.0 85.1 81.6 85.9 21 Dec '98 80.3 84.3 81.0 85.1 Future Retirees Current Retirees

Life Expectancy

  • Increase of over 5 Years in a decade (25%)
  • Each 1 year increase adds approx €65m to liabilities
  • Pensions starting earlier at age 61 on average
  • Preliminary figures for 2010 show further increase to 86.6
slide-8
SLIDE 8

IAPF Annual Conference : 13th October 2010 www.iapf.ie

Cash flow profile (1)

  • 50.0

100.0 150.0 200.0 250.0 300.0 350.0 400.0 450.0 500.0 2010 2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046 2049 2052 2055 2058 2061 2064 2067 2070 2073 2076 2079 2082 2085 2088 2091 2094 2097 2100 2103 2106 2109 Years € Millions Pensioners

slide-9
SLIDE 9

IAPF Annual Conference : 13th October 2010 www.iapf.ie

Cash flow profile (2)

  • 50.0

100.0 150.0 200.0 250.0 300.0 350.0 400.0 450.0 500.0 2010 2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046 2049 2052 2055 2058 2061 2064 2067 2070 2073 2076 2079 2082 2085 2088 2091 2094 2097 2100 2103 2106 2109 Years € Millions Deferred Pensioners Pensioners

slide-10
SLIDE 10

IAPF Annual Conference : 13th October 2010 www.iapf.ie

Cash flow profile (3)

  • 50.0

100.0 150.0 200.0 250.0 300.0 350.0 400.0 450.0 500.0 2010 2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046 2049 2052 2055 2058 2061 2064 2067 2070 2073 2076 2079 2082 2085 2088 2091 2094 2097 2100 2103 2106 2109 Years € Millions Actives Past Service Deferred Pensioners Pensioners

slide-11
SLIDE 11

IAPF Annual Conference : 13th October 2010 www.iapf.ie

Cash flow profile (4)

  • 50.0

100.0 150.0 200.0 250.0 300.0 350.0 400.0 450.0 500.0 2010 2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046 2049 2052 2055 2058 2061 2064 2067 2070 2073 2076 2079 2082 2085 2088 2091 2094 2097 2100 2103 2106 2109 Years € Millions Actives Future Service Actives Past Service Deferred Pensioners Pensioners

slide-12
SLIDE 12

IAPF Annual Conference : 13th October 2010 www.iapf.ie

  • “Scheme too big, too expensive and too risky”
  • Need to contain pension costs, reduce risks and eliminate

deficits to sustain company and pension fund

  • Action required to ensure pension scheme remains

sustainable now and in the long-term to allow it to pay benefits

due to all members

Company & Trade Union Alliance conclusions

slide-13
SLIDE 13

IAPF Annual Conference : 13th October 2010 www.iapf.ie

  • Formal closure of DB Scheme to new entrants
  • Scheme remains open to future accrual for existing

members

  • No change to discretionary treatment of pensions in

payment

  • No increase in member contributions or Normal

Retirement Age

  • Increased company contribution for 3 years to Dec 2013

– floor of 8.5% pa or €20m pa

IR Agreement (1)

slide-14
SLIDE 14

IAPF Annual Conference : 13th October 2010 www.iapf.ie

IR Agreement (2)

  • Pensionable pay freeze to Dec 2013 (follows previously

agreed pay freeze to June 2011)

  • From Jan 2014 Cap on growth of pensionable pay at

lowest of – actual pay increase or – annual rate of Consumer Price Index or – annual cap of (i) 4% for 2014,2015,2016,2017 (ii) 3.25% for 2018,2019,2020 and (iii) 2.5% thereafter

  • DC “top up” for increase in remuneration, if any, in

excess of cap from 2014

slide-15
SLIDE 15

IAPF Annual Conference : 13th October 2010 www.iapf.ie

Q& A Thank You