It is more than 23 years since Eir (then known as Telecom Éireann) was fully privatised by the State, during which time many private investors have extracted substantial sums from the company via various means.
Meanwhile, the taxpayer is still on the hook for certain pension liabilities in the company, as noted in the Comptroller and Auditor General’s annual report, published on Friday.
The report noted the minister for finance provided just over €1 billion to the Eircom No 2 pension fund when it was set up in December 1999. The fund was a legacy of when the company was part of the Department of Posts and Telegraphs and the workers were civil servants.
The State is the pension fund’s sole contributor and, at that time, “no further funding from the State was expected to be required”, the C&AG’s report noted.
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Famous last words
By early 2021, the pension fund was “fully depleted”. The latest actuarial valuation, as at October 2021, calculated the outstanding scheme liability at an eye-watering €1.1 billion.
So €81.2 million was paid into the scheme last year from the exchequer to meet pension liabilities. “Annual costs will reduce gradually to zero over the estimated 40-year lifetime of the fund,” the C&AG’s report stated.
Contributions to the fund are to be made on a pay-as-you-go basis, whereby the “minister will pay moneys to the fund on a scheduled basis in respect of benefits due”.
The irony in all of this is that the State used the €6 billion proceeds from the privatisation of Telecom Eireann to set up the National Pension Reserve Fund, which was due to meet the costs of the State’s future pension liabilities. But it was stood down in 2014, having been raided to bail out the banks and prop up the economy post the 2008 financial crash.
