Banks’ pension deficits double to €3bn

THE pension black holes at AIB, Bank of Ireland and Irish Life and Permanent have soared to almost €3 billion – more than double what they were a year ago.

The €3bn shortfall accounts for more than half the entire pension deficit of all of the companies listed on the main Irish stock exchange.

At the end of March 2009, Bank of Ireland faced a deficit of almost €1.5bn from €795 million in 2008. The latest reported deficit at the AIB scheme was €1.1bn at the end of 2008 from €423m a year earlier.

Irish Life and Permanent reported a deficit of €255m at the end of last year from €31m at the end of 2007.

The combined pension deficit at all Irish plcs was around €4.5bn at the end of April 2009 compared with €5.1bn at the end of 2008, according to Maurice Whyms of Attain Consulting.

He said it was impossible to say if pension schemes will improve over the coming months given the uncertainty in the financial markets.

“It’s hard to say what way things will go. We had a few months of positive performances as schemes recovered from negative investment returns over the last year,” he said.

The total deficit at the three banks is now more than €2.8bn from €1.2bn a year earlier.

An AIB spokesman said the deficit was a “significant shortfall” but the bank is taking measures to address the situation.

A Bank of Ireland spokeswoman said this was a “long-term issue” which will be addressed in part by market recovery but she added that the bank will also need to introduce other measures in the long-term. She refused to go into detail on what these measures would be. A spokesman from Irish Life and Permanent did not return a call for comment.

Bank of Ireland and National Irish Bank have recently approached finance union, the IBOA, to discuss their pension schemes.

The IBOA is also waiting on detailed information it has requested from AIB on issues which include matters relating to its pension scheme.

Chief executive of the Irish Brokers Association, Ciaran Phelan said: “We need truth serum. Trustees and employers need to be absolutely honest with the members of these schemes and communicate to them exactly how much money has actually been accrued on their behalf at this stage and what remedies would need to be taken to ensure they receive some or all of their promised pension in retirement.”