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JOINT COMMITTEE ON COMMUNICATIONS, ENERGY AND NATURAL RESOURCES díospóireacht -
Wednesday, 19 Mar 2008

RTE Superannuation Scheme: Discussion with RTE Group of Unions.

I welcome the representatives from the RTE group of unions: Mr. Seamus Dooley, Ms Patricia Brennan and Mr. Kevin Reynolds. We are glad to give them the opportunity of the forum to make their points and to try to make progress on the issue. The joint committee has invited the representatives to this meeting to discuss current and proposed superannuation entitlements payable to RTE staff.

Before we begin, I draw everybody's attention to the fact that members of this committee have absolute privilege but this same privilege does not apply to witnesses appearing before the committee. The committee cannot guarantee any level of privilege to witnesses appearing before it. Further, under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

I invite Mr. Dooley to make his opening remarks, after which I will invite questions.

Mr. Seamus Dooley

We are grateful for the opportunity to address the committee and to formally place on record the position of the trade union group on the defined contribution pension scheme. At the outset, I want to apologise for the absence of our chairman and vice chairman. They, along with the group of union's secretary and my colleague, Mr. Jimmy Jordan, are addressing a mass meeting of RTE workers today — at least, I hope it is a mass meeting — and therefore I will introduce our delegation. Ms Patricia Brennan is a programme editor with RTE news and is a member of the National Union of Journalists. Mr. Kevin Reynolds is a member of SIPTU and has responsibility for radio drama. It was our intention that Mr. Brian Hersee, who is a rigger representing networks, would be here, but due to the absence of changing facilities on Three Rock Mountain, he is looking on from the Gallery.

The change of the time of this meeting means that many of those who would like to be here are not here. Make no mistake about it, our members, after ten years campaigning, have now shouted "Stop" and there is an air of militancy within RTE and an air of palpable anger that most of us have not experienced for many years.

We recognise that this committee has no direct role in managing the affairs of RTE and, with respect to the committee, we would wish that it would remain so. RTE is, however, a public service broadcaster, a non-profit-making organisation owned by the Irish people and it is legitimate for this committee to examine the unfair and unjust pensions regime operated by the organisation.

While the operation of an unjust pension scheme is always unacceptable, it is especially wrong for the State, either directly or indirectly, to sanction an unjust discriminatory pensions system. We want to take this opportunity to set out the concerns of the RTE trade union group and in doing so, to address points made by the representatives of RTE to this committee.

In many respects, RTE is an anomaly. It is a public service organisation with a public service ethos and responsibilities, yet it is not covered by the benchmarking process and most employees do not enjoy the benefits of a public service pension scheme. Contrary to the public perception, RTE has many low-paid workers and, in our discussions with the company, the chief financial officer has acknowledged that it is a low-paid organisation by national broadcasting standards, notwithstanding the top line figures with which the committee will be familiar.

RTE, as a public service broadcaster, does not operate independently of the Departments of Communications, Energy and Natural Resources or Finance. In our ten-year campaign for improved pensions, we have frequently found the Department of Finance invoked by management as a barrier to progress. RTE management has frequently hidden behind the skirts of the Department. We have endeavoured to establish from the Department if an official policy is in place that debars RTE from improving the pensions of our members. The committee may have a specific role in overcoming obstacles in this regard with a view to assisting our members. I will ask Mr. Reynolds to sketch the background to how we arrived at where we are today.

Mr. Kevin Reynolds

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.

I thank Mr. Reynolds. Before I call Deputy Coveney, I would like to make two points. The reason we had to change the time of the meeting from 2 p.m. was that another committee, the Oireachtas Joint Committee on Climate Change and Energy Security, had already arranged a meeting for 2 p.m. Two spokespersons, Deputies McManus and Coveney, are obliged to attend that meeting and I am obliged to protect their interests on this committee and, therefore, took the decision to change the meeting to 12.30 p.m. I regret any inconvenience caused.

Mr. Seamus Dooley

We understand that. If the change brings about a climate change in RTE, it will be a small price to pay.

With regard to the attitude of the Department of Finance on the issue, following this visit of the trade union groups, we will speak to the Department and get confirmation of its stance on the issue. There appears to be some obstacle with regard to what I have been told by RTE and we would like confirmation that would clear up that issue.

I welcome the delegation. Some of us have already met representatives, both formally and informally, to discuss the issue and that is the reason we raised some issues with the RTE representatives when they were here. I have a slight conflict of interest as my brother works with RTE and is not in the executive pension scheme.

Is he in the top ten?

He is neither in the executive pension scheme nor in the top ten. The key issue concerns the shifting of risk from the company to the employees. I do not intend my questions to be provocative but wish to establish facts. Fundamentally, I am on the side of the unions. The proposed hybrid scheme, which has been rejected, proposes that the first €35,000 of an employee's salary would be subject to a defined benefit scheme and the remainder would be subject to a defined contribution. What is the average RTE salary for union members in terms of reaching a 50:50 target with regard to risk? I would like to get an understanding of that. RTE made a strong play of the fact that if the average salary was between €60,000 and €80,000, 50% of the salary would be subject to defined benefits. Will the delegation address that issue in a little more detail? I can see the point being made in the presentation but it ignores a potential contribution from defined contribution even though none of us knows what that contribution will be because, as the delegation stated, it is at the mercy of the markets. Am I correct in saying that the primary issue is that employees want some certainty as to what they will be likely to receive on reaching pension age? Is it the case that the big fear is that by asking employees to carry the risk, there is real nervousness that if somebody were to retire today, his or her defined contribution pension would not look too healthy? Everybody accepts that some form of more attractive hybrid scheme providing more certainty is what would provide the resolution. I ask for an outline of this hybrid scheme rather than a generalised picture of a 50:50 burden share in terms of risk. Is it being modelled on other hybrid schemes that have resulted from union-management discussion in some of the banks last year? I suggest we look at a precise model. This would be helpful from the point of view of the committee because we do not have a direct role in telling RTE management what it must provide for in terms of pension entitlements but we can certainly ask the hard questions.

I may be wrong but my understanding is that the Department of Finance does not play a significant role here in terms of restricting what RTE management can and cannot do. I think I understand the issues regarding risk and the need for certainty and even though RTE is not in the benchmarking process, benchmarking against other public sector bodies. Even though RTE has a commercial as well as a public sector remit, I ask the delegation to paint the picture of the final acceptable resolution for the delegation's members so that the committee knows in blunt terms exactly what is being discussed.

Mr. Seamus Dooley

I will ask Ms Patricia Brennan to address those issues. I make the point that the ESB and Bord Gais also have a commercial remit and have public service models.

Ms Patricia Brennan

There is no question but that people want certainty. Fundamentally people want a decent pension and the knowledge they will have a decent pension. RTE management has stated that it will give a decent pension. However the defined contribution pension scheme has been running for about 20 years and it has been underfunded. I speak as a trustee of the scheme. The majority of people in that scheme are not on target to receive a good pension. This is the reality now. People on that scheme are starting to hit pensionable age. I have seen the figures but I am not clear whether as a pension trustee I am permitted to share the details with the committee. The figures I have seen were based on 1 January 2007 which was a much healthier situation than now. They showed only one third of RTE workers on target to receive a pension of 40% of salary. People are aware of this. This is not a time bomb that is about to go off. The chickens have come home to roost and people know they are in a very bad situation. More money is needed to be put into the schemes and people need certainty.

One year ago I was on target to receive a pension of 37%. Last night I checked and I am now on target to receive a 34% pension. In the years that I have been in this pension scheme, I have been on target for everything from a 50% pension and a 27% pension. This is a very difficult to live with. The hybrid scheme as proposed by RTE has a salary cap that is very low. It takes the old age pension that we have all paid into over the years and puts it on RTE's side of the 50%, which is unacceptable to people who have already paid their PRSI contributions for all that time. It also has strings attached. It states that if a person opts for this one, it will not put extra money into that person's DC element even though everybody acknowledges that it was underfunded for years. If a person opts for this one it will not give him or her the lump sum it had agreed as a back payment in recognition of some of that underfunding. RTE has proposed a hybrid with a very low cap that is not attractive to low-paid workers who are already getting the old age pension and are also paying into the DC pension. It is not attractive to anybody and there are strings attached. It does not recognise our present situation, in which 1,200 people are poorly provided for even though they have been paying into a scheme into which RTE has not been putting enough money.

I believe Mr. Dooley has information on the average salaries.

Mr. Seamus Dooley

On the specific question on average salary, the average non-management scale — I stress these are top of the grade figures — is €52,000. The average for journalists is €55,600. The average for the vast majority of people on reaching the top of the scale is €52,000. It should not be assumed that everyone reaches the top of the scale. A significant number of people do not reach the top of the scale; many would be much lower than the top of the scale. We have accepted the principle of a hybrid scheme. However, a hybrid is only effective if it bears some relationship to reality in terms of people's wages. There is a general issue — not just for RTE — regarding the principle of integrated social welfare schemes. That is a policy issue across the board. When RTE refers to a 50:50 scheme with 50:50 risk sharing, the only way to calculate the value of the cap honestly would be if RTE were to subtract from its side of the equation the value of the social welfare. Then it would be genuine risk sharing. However, RTE in designing its system has asked us to give it the credit for social welfare integration.

Regarding whether we are modelling it on the banks, we recognise that the banks are much more profitable than other organisations, including RTE. However, the model has been designed by a number of financial institutions under the direction of third party institutions of the State, including the Labour Relations Commission and personnel. We may be able to look at other models. We do not have unrealistic expectations. While we are not quite going in with the Larkinite approach of aims most modest and only wanting the earth, we want something that is fair and reasonable.

The RTE delegation is very welcome. I wish them the best in the meeting that is being held at the moment. We all appreciate that this is an industrial relations issue and we must be careful not to overstep our role. It has certainly been a very protracted dispute that does not seem to be near a solution or conclusion. All I can do is wish them well.

This raises serious questions about public policy. I agree with the Chairman that we need to raise issues with the Tánaiste and Minister for Finance regarding what is the public policy. These are public sector employees. There is now a seriously under-funded pension scheme. The Department of Finance is taking a hands-off approach while at the same time being used as an excuse, which seems questionable in terms of what is public policy on this issue, a matter we need to pursue with the Department of Finance. I am not clear whether the Minister for Finance or his Department approved the original contribution scheme. Perhaps the witnesses could advise me in that regard. Initially I understood the defined benefit scheme had been closed. However, when I asked it transpired it had never been closed. It was just like the Ritz — nobody could get into it, but it was open for everybody. It turned out that some people were able to slip in. Perhaps Mr. Dooley can explain why, given that it is technically still open, people cannot join it. Some people have been able to join the direct benefit scheme. I would appreciate some clarification of this matter. This has been going on for 20 years, but it is just reaching a head now. Is it the case that undertakings which were given at the beginning have simply not been realised? Has the promise that was made not been matched by the reality? Why has it taken so long for this to come to the fore?

The committee needs to examine why a secret deal — it has never been published — was done with highly paid executives working for a public broadcaster. Nobody else seems to be able to get information on it, which is not acceptable in modern Ireland. We have to be accountable to the public. This is a good example of the need for openness. I am not comfortable with the idea that a scheme of this nature is being kept secret. We need to pursue this and to get the full information. Was there any period, during the transition from the defined benefit scheme to the contribution scheme, in which people had no pension cover? If so, what has happened to such people? How long did the period in question last?

I hope the forthcoming broadcasting Bill will be published before the beginning of the new session. The last broadcasting Bill was used by management to justify its decision not to follow normal procedures. It was argued that, as it was a contribution scheme rather than a benefit scheme, it did not have to be laid before the Oireachtas. Perhaps the legislation should have been clearer, although contribution schemes were not commonplace when the last broadcasting Bill was enacted. It seems we should be tightening our legislation anyway. Perhaps Mr. Dooley will tell us that the forthcoming broadcasting Bill has no relevance. If it is relevant, I would be grateful for Mr. Dooley's views.

Mr. Seamus Dooley

I will ask my colleague, Ms Patricia Brennan, to answer one or two of the Deputy's questions. I wish I was in a position to clarify whether the scheme is open or closed, but I cannot do so because it is one of the sacred mysteries of Donnybrook. When we asked the straight question that was put by the Deputy again today, we never got a straight answer. We were working under the assumption that the scheme was closed. It emerged during our negotiations that the scheme is not closed, it is just not open to us. It is an unsatisfactory and unacceptable situation.

I wish to outline the origins of the scheme. When the defined contribution scheme was created, it was unusual. The closure of direct benefit schemes and the introduction of hybrid schemes is now quite commonplace, but this was the first time it happened here. The phrase used at the time to describe it was "portable pension". It did not create any furore when it was introduced because changes were taking place within the broadcasting industry at the time. A number of staff, including journalists, saw themselves as having a short-term commitment to RTE, rather than a long-term future within the company. Opportunities were open to them in new national broadcasters such as Century Radio. Defined contribution schemes are attractive to those who move from place to place. The approach taken by management and employees at the time was daft. It was naive of the organisation to deliberately introduce a scheme that encouraged its staff to leave it and join its competitors. It must also be viewed in the context of then new Government policy that put a cap on advertising and put pressure on RTE. Therefore, all employees of RTE adopted a "we are all in this together" approach and believed they would be duly rewarded when circumstances improved.

Ms Patricia Brennan will address the specific questions on what happened during what we would call a transition.

Ms Patricia Brennan

This is a matter that people feel very strongly about in RTE, for obvious reasons. There was no day on which it was said that the defined benefit scheme would be closed and that those who joined thereafter would be in the defined contribution scheme. RTE was under pressure in the 1980s to keep staff numbers down. Some employees who joined on the same day were included in different schemes and others, employed on contract after contract due to the pressure to keep staff numbers down, missed the opportunity to join the defined benefit scheme because of the delay in regularising their positions. Employees who may have worked full time in RTE and nowhere else from 1982 onwards did not get into the defined benefit scheme because they were not officially RTE staff until 1990. There is a great sense of injustice in respect of this situation.

I appreciate that RTE was under pressure to keep staff numbers down but I believe people were exploited in a particular way. I do not know if this was done consciously but the individuals were kept on contracts until they could be included in a scheme that did not carry the same commitments on the part of the company. The truth is that when RTE approached employees who were on one contract after another and stated it was going to put them in a new category of continuous employment with an attached pension scheme, those employees believed they had made it and that circumstances were great.

On the question of why alarm bells did not ring sooner, the documentation given to employees initially was incredibly vague and optimistic. I have the first booklet, if members want to look at it. It does not mention that women would receive lower pay than men or that one could not——

What was that?

Ms Patricia Brennan

In any defined contribution scheme, women get less than men because they live longer. When women go to buy their annuity, they will receive less than men. This was only reflected in RTE's annual statements quite late on. The information was not very good.

The alarm bells did not start to ring until the late 1990s or 2000, at which time certain individuals who had been employed with RTE for ten years began to realise they were in the bad scheme while others, who had been employed by RTE for only a few years, were in the good scheme, and that they, the former group, would therefore not receive the money RTE said they would receive.

The first booklet refers to pensions of 80% and 70%. The percentages were lowered approximately five years later, yet they were still pretty optimistic. Some people said to me "Your scheme will be better because you can get the old age pension also." It was believed that someone who joined at 25 and was contributing 5% per annum, in addition to the company's contribution of 5% per annum, would receive a final pension of 84%.

It is not unrealistic to expect that one will get a decent pension if one works for a good company. RTE is full of arts graduates who do not think about financial matters as much as they should. They believed the pension offered by RTE must be okay, but they were incorrect. This has become apparent over time.

Mr. Seamus Dooley

It would be useful if the Broadcasting (Amendment) Bill made reference to the legislative position on pensions. As a member of the executive of the Irish Congress of Trade Unions, I realise the issue that arises is broader than the one concerning RTE in that it relates to the attitude of the Department of Finance to defined benefit schemes within the public service. This matter arose during the last round of pay talks and it is stated on the public record that, as a result of a freedom of information request from an employee in RTE, an internal memo was produced that made specific reference to a move towards a defined contribution scheme, with advice attached that it would not necessarily be helpful to achieve this during the pay talks. The broader issue concerns policy or the lack thereof in respect of the defined benefits scheme. Everyone must acknowledge the current climate. One need only look at the news in the past 24 hours to know that the pension situation is extremely serious, but it is presented in some respects as something that is happening elsewhere. However, our members in defined contribution schemes are seeing their future go down the plug hole.

Mr. Kevin Reynolds

I will address the question of the secret deal. The entire issue rests on the requirement that there be equity, fairness, transparency and openness. It is part of RTE's remit to ensure this is the case and that it be seen to be so. We would have preferred the defined benefit scheme had such been on offer. Through negotiation, however, we agreed to the hybrid scheme and that will be the situation for the future. The most divisive issue was the introduction of this third scheme giving certain preferred employees between 16% and 30% in contributions from management while our members receive between 5% and 7%.

Will Mr. Reynolds clarify the identity and number of these preferred employees? I acknowledge there is something of a veil of secrecy in this regard.

Mr. Kevin Reynolds

We have tried on several occasions to obtain this information under the freedom of information legislation.

Can a calculation be made in terms of trade union group members? The unions know how many people have the pension entitlements the delegates have described as unsatisfactory. Can one presume that all other employees are in some other scheme?

Mr. Seamus Dooley

I will deal with that question. We believe these employees are in receipt of contributions of between 25% and 30%. Some of them are at senior managerial level. The argument has been made that these were people who were externally recruited and that there was a commercial imperative to offer them a superior pension scheme. In addition, however, there are undoubtedly others not at executive level who were included in that scheme. The evidence for this is anecdotal, however, and I am not prepared to speculate other than to say that not all the relevant employees are at executive level.

Everyone knows what union members in RTE earn; it is a matter of public record. The information on the various grades is available to the committee and the public. Everyone knows the identity of the top ten earners. However, we are not allowed to know who is included in the superior pension scheme. Of greater significance is that we do not know the criteria for inclusion in the scheme. I accept that business decisions must be made in regard to the recruitment of staff. However, we do not accept the existence of a gold plated scheme. In a public body, the criteria for any incentives that exist should be made available.

I do not wish to stray into the industrial relations area. However, there is an issue in that this scheme was created at a time when management at the public service broadcaster was in negotiations with the trade union group about the existing scheme. There is a question, therefore, of good faith, trust and transparency. This is not merely an industrial relations issue. In the case of the public service broadcaster, good faith, trust and transparency should be core principles. Deputy Coveney's question can only be answered by RTE. We can merely speculate. While we represent the majority of members of the scheme, some employees are members of the management association in RTE and there is a small group of employees who do not belong to any representative association and who may also be members of the defined contribution scheme.

I welcome the union representatives. Whatever eventually happens in terms of the resolution of this dispute, at least it can be said that this committee and the general public are being well informed of the issues. In disputes such as this, it seems more often the case that difficulties arise without warning and nobody knows what is going on. That is certainly not the case here and this meeting has been a useful exercise in this regard.

RTE claims it is debarred from including employees in its defined benefit scheme because of Department of Finance regulations. How can it apparently offer inclusion in that scheme to new employees if it is debarred from doing so by the Department of Finance? I am not sure how the Chairman wishes to proceed on this issue; whether the committee will write to the Department or ask the Minister and his officials to attend a meeting to try to get to the bottom of this. It seems to be a critical issue around all of these negotiations. If we can play our part in trying to unravel this, we would be delighted to do so.

Mr. Dooley might know about the next matter based on his experience. There are other semi-State companies which I assume would have been operated in a fairly similar manner to RTE in respect of pension schemes in the past. Have they run into the same problems? Have they changed from defined benefit to defined contribution? Have they used the excuse that they are debarred by the Department of Finance as well in prolonging defined benefit schemes or introducing new defined benefit schemes?

In respect of the hybrid scheme and the €35,000 limit, I presume that if this was introduced, it would be index linked and would move up with inflation into the future. What happens in a situation, which usually does happen, where inflation might be at 2% or 3% but the old age pension could go up by 5% or 6%? This effectively brings down the contribution that RTE would have to put into the scheme. How is it envisaged that this would be dealt with? It seems that on a pension of €17,500, RTE only has to put in under €6,000 of it and is probably undercontributing anyway. It appears that RTE is basically carrying no risk on that element of it. Does the delegation have any figures about what might happen beyond the €35,000 limit? I know we cannot predict what the markets are going to do but does the delegation have any sort of projections as to what might be available there? What are RTE's current contributions to the scheme for each employee? What does RTE put in and what does the employee put in? Ms Brennan mentioned that she is in the defined benefit scheme.

Ms Patricia Brennan

No, defined contribution.

Is everybody in the defined benefit scheme guaranteed 50%?

Ms Patricia Brennan

I think they are entitled to 50% and a lump sum.

What happens——

Ms Patricia Brennan

It relates to service.

It is dependent on 40 years service. What happens if the scheme is underfunded and a person cannot get the 50% because the money is just not there as RTE has not funded it properly? Is it being funded properly? When it was before the committee, I think RTE said that its pension scheme is underfunded. To what extent is it underfunded or is the delegation aware of it?

Ms Patricia Brennan

When I said that it was underfunded, I was referring to the defined contribution scheme and that inadequate levels of contributions have gone into it to guarantee or make it likely that members would have decent pensions out of it. The superannuation scheme is a different matter to which I am not privy. That would be covered by——

Mr. Seamus Dooley

That would be covered by regulation and would be subject to the provisions of FRS17 and Pensions Board regulation. There is no suggestion that RTE is not meeting its obligations in that respect. In respect of pension contributions——

I went through the document that was sent to us a number of days ago. There is a significant gulf between the delegation and management in respect of the defined benefit salary cap. Therein lies the risk. If the delegation gets its numbers up and RTE's numbers come down, an agreement can be accommodated. To be frank, the gap between both parties is ridiculous. There certainly seemed to be a shift after the non-resolution of that section.

I realise that I am touching on the industrial relations aspect of things. With industrial relations, there is always an accommodation. Regardless of whether one goes on strike or takes industrial action, one must still find the accommodation afterwards. Speaking as one who is very much in favour of the defined benefit scheme on the basis that one knows what one will get, one of the major benefits of working for the State, regardless of whether one is a public or civil servant, is that one knows the pension one will get. For whatever reason, the RTE unions' members are still in the position they are in.

Have other agencies which are similar to RTE and which also have a commercial remit, such as Bord Gais, factored downwards their costs where the old age pension is available and where people have paid into it for a number of decades? Have they factored out of their pensions the old age pension to which one has paid in and is entitled? This is my read of what is happening in the defined contribution scheme. If they have, how can the unions representing those workers allow this?

When people look at RTE, everybody sees the top earners and the executives but they do not see the guys wheeling stuff around or in the mail room. I presume approximately 60% of staff, both journalists and others, earn the average figure of €55,000. A significant number, perhaps two thirds of people, will receive a poor pension and they will approach pension age in the next five to ten years. Ms Brennan stated her pension fund is down to 34%. Who knows where pension funds will end up with the turbulent nature of the markets at present. Equally, they could recover; pension funds should be considered in decades and not months.

The unions have a far stronger hand to play with regard to staff retiring on modest figures rather than other staff on the higher end. I do not want to use Bord Gais as a specific example, but I am interested in the fact that this agency factored out the old age pension from its pension.

I ask the delegation to deal with these questions now.

Mr. Seamus Dooley

I am not clear whether the commercial semi-State bodies have integrated schemes. However, I am clear that all of them are defined benefit schemes and therefore the issue of risk does not arise. With regard to Deputy Kenneally's point, my memory is that one group, Bord na Móna, examined changing its scheme but I believe it is still the subject of negotiation. The Cathaoirleach will appreciate why I am familiar with this case. All of what we consider comparable commercial semi-State bodies, such as the ESB, Bord na Móna and Bord Gais, have defined benefit schemes which are fully funded. Other examples of more recently created bodies with such schemes are the Railway Procurement Agency, the Standards in Public Office Commission, the Office of the Director of Telecommunications Regulation, the Health Service Executive——

Does Mr. Dooley believe all of those are approved by the Department of Finance?

Mr. Seamus Dooley

Yes. I do not see how they could function otherwise.

I spoke with my previous employer, the local authority, and it has a full defined benefit scheme. Is any other semi-State agency of any nature in the same position as RTE?

Mr. Seamus Dooley

TG4. I will hand over to Ms Brennan to answer other questions.

Ms Patricia Brennan

I am not sure whether I noted down all of the questions. In terms of contributions, someone asked how much RTE now puts into the defined contribution scheme. For approximately ten years, RTE put in 5% and the staff member put in 5% which totalled to 10% of salary. This increased to RTE putting in 8% with the staff member still putting in 5%. Staff members have been responsible because what they put in as extra contributions now outweighs what RTE puts in. Staff members do not behave irresponsibly and they put in extra money. If my memory serves me well, when our financial officer, Mr. Conor Hayes, was before the committee, he stated that over a long period of time one would need to put 20% of salary into a defined contribution scheme to be certain of ending up with a comfortable amount. We are nowhere near that. For ten years, only 10% of salary was going in and now the figure is up to 13%.

In terms of whether other matters were integrated, I think Mr. Dooley answered that question. We would have no problem with the old age pension being integrated if we were to get a full defined benefit scheme. That would be fine but if we were to get a low salary cap and the old age pension as part of that, then RTE's contribution would be quite small.

May I come back to my original question? I asked about the construction of a hybrid scheme, as we are calling it, that would be acceptable to members in terms of where the salary cap should be with regard to the share of risk between the company and its employees. The irony is that the more uncertain the markets are, the less attractive it is for RTE management to take on more risk and the ideal scenario for it would be to stubbornly continue saddling the employees with risk.

I am not sure it is necessarily helpful to compare local authorities or the HSE with RTE because the structures of all three are very different, even though there is obviously a public service element within RTE. However, it is absolutely fair to make the comparison with Bord Gáis or the ESB, given that RTE has competitors and needs to survive commercially, as well as relying on licence fees. Obviously, the HSE is an entirely different structure.

I wish to determine the size of the gap between what is on offer at the moment, which is clearly not acceptable, and what is being sought. I am not seeking exact figures but rather an idea as to what would be regarded as fair for members, in terms of the salary cap or, indeed, whether it should be on the basis of a salary cap at all but rather done on percentage terms. I am seeking a general idea here. Today we want to obtain information and to edge towards a solution that would be acceptable. While we cannot bring about a solution, we can certainly continue to ask questions.

Mr. Seamus Dooley

As Deputy D'Arcy stated, we are in the remit of industrial relations at this stage. I believe it would be unsafe for me to go back to the mass meeting in RTE, having shown my hand to Deputy Coveney, but I do not wish to be unhelpful in saying that. The Deputy has asked what would be acceptable. A cap which bore a greater relationship to actual salaries would be acceptable. Our preferred option would be the inclusion of everyone in the defined benefit scheme but we accept that is not possible. As the Deputy pointed out, RTE has commercial considerations. We now accept that our goal, which was the goal for many years, is not attainable. That was a long journey to bring our members on because we believe that a defined benefit scheme for everyone is the most just solution. However, we have moved from that and have stated that we will accept, in the circumstances, a hybrid scheme which is more realistic. From that, if one extracts the figure for which RTE is taking credit, which is the social welfare figure, that gives one a more realistic basis, as Deputy Kenneally has pointed out, in terms of RTE's risk. When one does that exercise, one has a clearer picture. However, I do not think it would be wise for me to go beyond that now, unless my trade union colleagues think otherwise.

Ms Patricia Brennan

We want something that will deliver a decent pension, with some security. There are lots of ways to achieve that. AIB has achieved that, as have other organisations. RTE could engage on that level with that goal in sight and achieve it in any number of ways. However, at this stage we cannot say that this is what we will go for and this is where it will settle. Ultimately, the settlement must be a decent contribution for people who worked their whole lives for one of the best companies in the State, a public service broadcaster, for whom we are all very proud to work. We should be able to have the reasonable expectation of a decent pension. That is what people need. How we get there is part of the negotiations.

I raise a point that Mr. Reynolds touched upon earlier. RTE said that it has accepted an invitation to negotiations through the National Implementation Body. In the eyes of the public, RTE would appear to be the good guys who are prepared to continue negotiations. The delegates referred to a reason why the unions felt they could not engage. I ask to be reminded of that reason.

Mr. Seamus Dooley

What we said was quite nuanced. I assure the Chairman that what our members want to do is to return to the newsrooms and the riggings and make programmes. We have no interest in disruption and I want to make that clear. We will go anywhere at any time to secure a fair pension for our members — preferably not out on the road.

After ten years we have reached a situation where there is a level of frustration and as a full-time official I have to manage that. What the industrial relations tribunal recommended was that we would seek the intervention of the National Implementation Body on a joint basis under the provisions of Towards 2016. Towards 2016 is very specific in how it defines a case for intervention, namely, "where there is active engagement of all the parties". We do not believe that at the moment there is active engagement of all the parties. I have no doubt that RTE would dispute this.

We believe that, by producing what it calls a preferred scheme, and by providing incentives for people not to join a defined benefit scheme, RTE is not in active engagement. If we believed that referral to the National Implementation Body or the involvement of some third party would advance the cause of our members, we would have no ideological objection to going before the National Implementation Body, the Labour Court or any other body. It would have to be a more active engagement than we have encountered to date.

We have had a considerable number of meetings and a large amount of documentation. We have not produced results. What has driven the group of unions to consider a ballot for industrial action is ten years of very little progress. There is an industrial relations reality here which is that until now we have not been taken seriously. Only the threat of industrial action after ten years of patience has actually forced this onto the agenda. I assure the committee that if we believed that there was active engagement and that referral to a third party was going to yield results, that would be our preferred option and a defined benefit for our members.

Ms Brennan suggested that the AIB scheme was a model that could be used or replicated. Am I correct?

Ms Patricia Brennan

I am speaking for myself because this has not been discussed.

It is one of the better schemes. There was also a suggestion that 37% of salary would have been the figure achieved if unions had gone out a year ago. That is perhaps down to 34% now. Does Ms Brennan have any idea of what someone in the AIB scheme would get? I realise it is probably an unfair question.

Ms Patricia Brennan

I have not done the sums but they are guaranteeing a defined benefit of up to €61,000. When they compute the members' contributions, that figure is integrated with the old age pension. However, they take the amount already paid through PRSI out of what they take from members, so it seems quite good. I would need more actuarial expertise.

Mr. Kevin Reynolds

Looking ahead, I do not think there is an employee in the scheme who would be averse to considering inclusion in the senior executive scheme. We would all be quite happy to join that scheme.

That is fair enough.

Mr. Kevin Reynolds

I do not mean to be flippant about it but what is sauce for the goose has to be sauce for the gander. I keep returning to the equity and the equality of this pension scheme, to the director general and the person on the other defined benefit scheme who works in the postroom. Both know, to the penny, what their entitlement will be the day they retire.

Mr. Reynolds can take it from this meeting that the committee will attempt to establish what the criteria are for the executive pension scheme and how one qualifies for it. I believe we are entitled to ask those questions and to get answers.

Can the delegation give an idea of the next steps for the unions in terms of inching towards industrial action, which is something nobody wants? What is the time frame for that, or are there meetings taking place to establish that? What are the criteria required, apart from asking for more active engagement from management, before unions will agree to go to the National Implementation Body for a compromise?

Mr. Seamus Dooley

Even for an Offaly man I have not mastered of the art of bi-location, so I do not want to presume——

Mr. Seamus Dooley

——what has happened in Montrose. The recommendation from the executive was a ballot for industrial action up to and including strike action, because we believed RTE management had not engaged. One of the issues that must be taken off the table is the notion of a preferred option. The use of such language is a barrier to progress.

The National Implementation Body, NIB, is a strange creature, in that it does not have a secretariat or rules of engagement. I am not under estimating the importance of its role, because it has played an important role in the past, but what it does is signpost for both parties the directions we may go. For instance, it might recommend a course of action in other ways but I do not want to predict what the NIB will do.

The unions want a signal from RTE management that there is a real possibility of resolving this within the context of a hybrid scheme at a level the unions can live with. In the facilitation process — and I wish to acknowledge the contribution of both the industrial relations tribunal and its former chairperson — RTE has moved in baby steps. The movement was such that it did not convince unions that there was real possibility of progress. Every time management went out of the room, they came back with very small figures. We are seeking active engagement from management with real figures that mean something on the table.

By the way, we have a very good industrial relations climate in RTE and it is a good place to work. RTE management does not need the services of the National Implementation Body to find the offices of the group of unions; we are ready and available. If we need third party intervention and our members decide the NIB is where we will get the best deal, then that is where we will go.

I thank the committee for the time given, the attention paid to these issues and the indication that the committee will assist us in going over some of the hurdles. I do not expect the committee to do our work for us but some of what is required is focus on information.

I thank the delegations. We have had a useful exchange of views and the committee is glad to provide the forum for that. The committee will seek clarification from the Department of Finance immediately on its position on these matters. There is an obstacle facing both sides. If that can be removed it might at least lead to some progress. Our remit is quite small. There is a limit to what we can do and the unions understand this. However, we wish to facilitate in any way we can to try and get the approval from the Department of Finance at the earliest date possible. The committee will be in touch as soon as this happens.

The joint committee adjourned at 13.58 p.m. until 3 p.m. on Wednesday, 2 April 2008.

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