Dáil Éireann debate -
Wednesday, 19 Feb 2003

Vol. 561 No. 5

Written Answers. - IFI Workers.

Paul Kehoe

Question:

155 Mr. Kehoe asked the Tánaiste and Minister for Enterprise, Trade and Employment the contact she has had with IFI workers; the number of times she has met with them; the subjects discussed since the factories have closed; and if she will make a statement on the matter. [4818/03]

Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney)

Following the announcement of the decision of the board of IFI to close the company, I met with the IFI unions on 17 October 2002 and again on 22 November. In addition, there have been numerous meetings and other contacts between officials of my Department and workers representatives.

The main concerns raised by the workers representatives related to redundancy and pension entitlements. Most workers have now received their statutory redundancy entitlements as well as an interim payment of €5,000 from theex gratia fund of €24.5 million provided by the two shareholders. It is expected that the basis for distributing the balance of the ex gratia fund will be determined very shortly and that employees will be able to collect any amounts due from the fund in the near future.

In addition, the employees may, in due course, receive some further payment out of the liquidation in respect of contractual rights to redundancy payments. The amount involved will depend on the outcome of,inter alia, the sale of the company's assets. Thankfully the main pension schemes covering employees in the Republic are in quite good shape and I understand that the actuaries have estimated that there is sufficient funds to meet all of the entitlements provided under the scheme, as well as pensions increases of about 3% per annum. However, employees had hoped that they would receive pensions increases in line with CPI, although payment of such increases in the past has been contingent on the level of funding in the scheme. They had also hoped that they could continue to benefit from a discretionary concession granted by the trustees in the past, whereby pensions paid before normal retirement age are reduced by a preferential discount rate rather than on normal actuarial terms. The trustees have asked the shareholders to underwrite an investment strategy for a number of years in the hope that rising stock markets would enable these discretionary benefits be restored. This proposal is under consideration by the two shareholders at present.

Unfortunately, it appears that the Belfast pension scheme will only be able to pay active members – that is, the employees still working at the time the company ceased operations – less than half their entitlements under the scheme. The regulations require that existing pensioners are given priority and as a result, they are largely unaffected by the shortfall in the fund. The shortfall involved arises primarily from a combination of stock market losses on investments and the impact of the regulatory regime in the North which provides that pension schemes fund on a going concern basis, rather than on a discontinuance basis, which allows for the additional costs of acquiring annuities, etc. The regulations in the Republic require defined benefit schemes to fund on the more rigorous discontinuance basis.