IBOA welcomes hybrid scheme
28 July 2008

Written by Sophie Baker

The Irish Bank Officials’ Association (IBOA) has welcomed proposals for a new hybrid pension scheme at the National Irish Bank for new employees who join the company after 1 August 2008.

The proposals for the scheme contain elements of both the defined benefit (DB) and defined contribution (DC) pensions, and current staff will remain in the existing DB scheme. They were developed under the auspices of an independent mediator, Kevin Foley.

Foley’s proposals were described as a “significant development – especially since the bank’s opening position was to seek the transfer of all future staff to a new Defined Contribution scheme” by IBOA general secretary, Larry Broderick.

Broderick continued: “It is possible to address the legitimate funding concerns of employers without depriving their employees of the prospect of a reasonable income in retirement.”

The proposals will see all new staff pay five per cent of their salary into the DC element of the scheme, which with tax adjustments results in a net cost to the individual of 2.5 per cent. The National Irish Bank believes the new scheme would provide an employee who joins at 20, stays to the age of 65 and contributes in full, with a pension worth 64 per cent of their final salary, in addition to the State social welfare pension.

Foley has also suggested that death-in-service benefits be increased in the new scheme relative to the existing DB scheme and provide a lump sum benefit of four times pensionable salary. Permanent health insurance is to be made available for all staff, current and future with effect from 1 February 2009, which will be fully funded by the bank. One additional day’s leave on a once-off basis in the 2009 leave year will also be awarded to all current staff who are represented by IBOA.

National Irish is the third major banking group in the Republic to adopt a hybrid approach to pensions for new employees, and follows similar schemes settled by IBOA in AIB and the Bank of Ireland.

The proposals are to be balloted on by all IBOA members in National Irish Bank.