Bank of Ireland has resolved its pensions row with the Irish Bank Officials Association (IBOA) and Amicus (now Unite) after the two unions backed Labour Relations Commission (LRC) proposals on a new "hybrid" pensions scheme.
Bank of Ireland workers will now be balloted on the proposals agreed yesterday, which would see a new pensions scheme known as LifeBalance introduced for new employees.
Staff who joined Bank of Ireland at entry level since October 2006, when the bank first announced it intended to close its defined-benefit pension scheme to new entrants, will have the option to join this "legacy" scheme. But employees who join the new scheme will receive higher pay.
Under proposals recommended by the LRC, endorsed by the Labour Court and accepted by the bank, the new entry-level employees who agree to contribute to the Personal Investment Account (PIA) - the defined-contribution part of the LifeBalance scheme - will receive 3 per cent higher pay than those who join the old scheme. The same 3 per cent salary increase will apply to staff who joined the hybrid scheme since October 2006 and stay in the scheme.
The bank will also make additional contributions to the PIA in the first three years.
About 1,400 new employees in the Republic and the UK who joined the LifeBalance scheme since October 2006 now have three months to decide whether to stay in the scheme or join the old scheme. The staff will be advised by consultants from pensions firm Watson Wyatt about which option might be the best for their circumstances.
The LifeBalance scheme is a mix of a traditional defined-benefit scheme, which guarantees a benefit based on salary and length of service, and a defined-contribution scheme, where the level of benefit generated depends on the amount contributed and the investment returns.
All future new staff will contribute a mandatory 2.5 per cent to the defined-benefit element of the scheme, which is known as the Retirement Capital Account. The bank will match contributions to the PIA up to 3 per cent.
The parties agreed to review the LifeBalance scheme every five years. The bank will also enter into negotiations about introducing permanent health insurance for existing staff from July 2008.
