Union fury over bank’s generous pensions

The Government is permitting “one rule for the rich and another for the rest” by rubber-stamping “extremely generous compensation packages” for former bosses, the country’s main banking union has claimed.

IBOA’s comments came in the wake of claims earlier this week that AIB used some of the €1.1bn it got from the State to fund the more than half a million euro former AIB chief executive Eugene Sheehy is getting each year from his pension.

Yesterday it emerged the bank had written to former senior executives, reported to include Mr Sheehy and managing director Colm Doherty, asking them to take a voluntary reduction in their pensions.

The bank’s chief executive David Duffy told the Financial Times that more than 15 former directors would receive the letters over a four- to six-week period.

Taoiseach Enda Kenny said that retired former bank directors had a “moral responsibility” regarding the levels of their pension pay-outs — but he again refused to take direct action against them.

Despite his stance drawing heavy opposition fire, Mr Kenny insisted the Government was legally bound by arrangements made by the previous Fianna Fáil/Green administration.

The Taoiseach indicated he would not be supportive of a second move to transfer funds to deal with future pension deficits after what had happened. He insisted the first transfer was needed to avoid forced redundancies at the bank.

In a statement, David Duffy also sought to clear up what happened to the €1.1bn saying it was used to contribute to its cost savings measures.

He said: “The transfer of assets to the pension fund earlier this year took place so that the early retirement scheme at the bank could proceed. Had this not happened a major part of the bank’s voluntary severance scheme could not have taken place as it would have required a cash contribution from the bank.”

AIB asks former directors to consider voluntary pension cuts. PR Stunt nothing will happen http://t.co/S3boUvOC via @irishexaminer

— Glic 16 (@Glic16) November 6, 2012

IBOA said that since the onset of the banking crisis, there had been exceptional treatment for former senior executives across the financial services sector. Yet, it said, over the same period its members had been forced to face redundancy and early retirement on very modest terms.

“While the hypocrisy of this situation offends commonsense and natural justice, we learn from the Minister for Finance that these generous executive pension arrangements must be honoured because they are contractual,” said IBOA general secretary Larry Broderick.

“Like so much else in Irish life, there seems to be one rule for the rich and another for the rest,” he said.