Siptu set for talks with Rehab over pension crisis

What the Rehab Group intends to do for approximately 800 employees left with a 15% pension deficit following closure of a defined benefit (DB) scheme will top the agenda at talks later this week between Siptu and trustees of the group.

Siptu is seeking an increase in the company’s current pension contribution of 6% following the loss of the DB scheme, which closed in December 2012.

The argument for an increase is against the backdrop of recent revelations Rehab Group chief executive Angela Kerins is paid a salary of €240,000 while 12 senior managers earn more than €100,000 a year.

The DB scheme in question was only available to staff employed before 2005 and, according to the company, has been in “serious deficit” since 2008.

Accounts for 2008 show it was Rehab’s most robust financial year. That same year, two weeks before Christmas, the Group informed staff they would not be paying the Christmas bonus (the equivalent of one week’s pay). Siptu took a case to the Labour Court and won. Employees received a payment of €200 plus a day’s leave for 2008. However, the bonus has not been paid. Siptu is awaiting a date from the LRC in relation to this. Recent revelations before the Dáil’s Public Accounts Committee showed some Rehab executives earned bonuses of up to €14,200 as recently as two years ago.

The row over the 15% pension deficit has been ongoing for more than a year. Initially the company offered to pay 71% of the value of employees’ entitlements under the DB scheme but this was resisted by Siptu and the offer was upped to 85% last June after the trustees came up with €6m. The union is seeking further compensation for affected employees. It is also seeking a minimum pension amount for low-paid workers.

Correspondence seen by the Irish Examiner shows the Rehab Group wants to freeze staff increments and implement further pay cuts, as well as reduce pay for new recruits by 10%; reduce redundancy payments and increase working hours.

A statement from Rehab said its DB scheme “like over 80% of DB schemes”, has been in deficit since 2008, a deficit that continued to increase in 2012 due to, inter alia, the rising cost of pension provision and uncertainty in global markets. Rehab said it had given employees the option to switch to a defined contribution scheme in 2010 and were also given the option to remain in the DB scheme but to contribute 8%. This was not endorsed by the Pensions Board.

Rehab said “urgent action was required to protect the [DB] scheme and its members from further losses, so it was decided to close it in December 2012”.

The statement said the company has “provided a commitment to consider all possible benefit structures”.