Ba mhaith liom cúlra an géarchéim seo a léiriú don choiste. The background is that the RTE trade union group, TUG, has been trying since 1999 to ensure just pension arrangements for staff members in the defined contribution pension scheme. The scheme was introduced after the traditional defined benefit scheme, which had been in operation for staff since the inception of the service, was closed to new members. Following the transformation agreement in 2000, RTE delayed engaging with the TUG on the pension issue in any meaningful way for more than two years. However, during this period, or shortly afterwards, RTE introduced a third special pension scheme for some senior executives and other highly paid individuals with employer contribution rates ranging from 16% to 30%. Information on this scheme has been withheld by management. Even a freedom of information request has failed to elicit the details. We do not know the rules governing this scheme or the criteria for membership of the scheme.
Reviews of the DC scheme conducted by Coyle Hamilton Willis in 2003 and 2005 were rejected by the TUG on equity grounds. CHW proposed a stratified, age-related contribution scheme, which would have resulted in resources being diverted to more recent older entrants and away from general members with longer service. The TUG considered that this would introduce a structural inequality and it would be a dubious use of resources. This proposal would also tend to benefit senior entrants at management level. The TUG believes the DC pension scheme is flawed on two counts. First, employees of RTE bear all the risk regarding investment returns and, second, there is an absence of any guarantee regarding the resulting pension.
The TUG also believes it is unjust that two staff members in the same grade with the same salary could face very different pension outcomes, depending on whether they belonged to the defined contribution or the defined benefit scheme. A member of the defined benefit scheme is guaranteed 50% of final salary after 40 years service while a member of the DC scheme has no guarantee and will not know his or her pension entitlements until the day he or she retires. During conciliation talks at the industrial relations tribunal, which is an internal labour court within RTE, and the full hearing, management repeatedly said it would not under any circumstances agree to the introduction of any type of defined benefit scheme. Management simultaneously argued that RTE was also debarred from introducing such a scheme by the Department of Finance. The IRT rejected the TUG's claim for a full public sector defined benefit scheme and instead recommended an enhanced version of the Coyle Hamilton Willis proposals. The IRT recommendation was overwhelmingly rejected in September 2006 by 95% of members of the defined contribution scheme.
RTE and the trade union group then entered into a facilitation process under Mr. Seán Healy, former chairman of the IRT. During this process, Mr. Healy persuaded RTE to agree to a hybrid, risk-sharing scheme. In hybrid schemes a salary is capped at a certain level and this is pensioned on a defined benefit basis with the balance of salary pensioned on a defined contribution basis. At the end of the facilitation process RTE had proposed the following: a defined benefit cap of €35,000 integrated with the State old age pension with the balance of salary subject to a defined contribution scheme. In current terms this would result in the following guaranteed pension after 40 years service: a pension of €17,500 to €35,000 divided by two to be made up of the State old age pension guaranteeing €11,611 and the contribution from the scheme, guaranteed, would be €5,889. The TUG does not believe this is a fair return on 40 years' service. The fact that the balance of salary, above €35,000, would be pensioned on a defined contribution basis provides no guarantee of any return.
RTE stated that it intended the scheme to be a risk-sharing scheme on a 50:50 basis between it and members. Crucially, however, in the document setting out the new proposal, RTE stated that member employees should be actively encouraged and incentivised towards acceptance of the IRT recommendation and that the RTE defined contribution pension scheme thus remains its primary and preferred pension mechanism of choice.
It is clear RTE never intended the new scheme to be an attractive alternative to the IRT recommendation. The guaranteed pension of €5,889 would represent a salary of €11,778, considerably below the minimum wage and nowhere near the 50:50 level of risk-sharing RTE claimed it intended to achieve. At the Oireachtas joint committee hearing in February, RTE's chief financial officer repeatedly stated that RTE's refusal to introduce a reasonable defined benefit scheme had nothing to do with cost. He stated:
It is not a question of money. It is not a cost saving we are trying to get. We are prepared to put a significant amount into pensions. We did not save money due to the introduction of the DC scheme. It is not a cost saving device. This is not and never has been a cost saving issue.
However, RTE has pointed out to the trade union group that the cost of providing digital terrestrial television along with the diaspora service and other capital projects would make it difficult for the station to undertake the financial burden of a full defined benefit scheme. Effectively, this means our members are expected, indirectly, to fund these developments by foregoing a pension which is a guaranteed right for many of their colleagues, for employees in other statutory bodies in the semi-State sector and the Civil Service.
For our members, this is about money. It is also about abandoning responsibility for the welfare of a significant and increasing percentage of employees and leaving them at the mercy of the markets when they are at their most vulnerable. Incidentally, our submission to the IRT demonstrated that between 1998 and 2004 RTE reduced its pension contributions as a percentage of wages from 12.4% to 7%.
The TUG group referred the issue of the hybrid salary cap and other related issues to the IRT for full hearing. The IRT rejected this request on the grounds that, in its opinion, the claim was similar to the previous rejected claim. The industrial relations tribunal did not accept the trade union group view that our case was based on a significantly new concession by management. A difficulty throughout this process has been the level of inconsistency in management's approach.
The tribunal suggested instead that the TUG and RTE should jointly refer the issue to the national implementation body. Referral to the implementation body is provided for under Towards 2016 and assumes "active engagement of all parties". Given management's behaviour, particularly the insistence on "a preferred pension mechanism"— in other words, promotion of the defined contribution scheme — the TUG executive did not believe that the joint referral to the implementation body was consistent with clause 8.3 of Towards 2016.
The TUG recommendation is a ballot for industrial action, up to and including strike action, as it believes all our agreed industrial relations procedures have been exhausted and that RTE has not engaged meaningfully with members on the issue. This is an unjust situation and is likely to cause significant industrial unrest if a solution is not found in the near future.
A Chathaoirligh, a Theachtaí agus a dhaoine uaisle, go raibh maith agaibh go léir. Táimid anois réidh agus sásta iarracht a dhéanamh aon cheist a fhreagairt. I thank the Chairman and members for receiving our presentation. We will be happy to answer any questions the committee members may have.
