Bord na Móna is proposing fundamental reform of pension entitlements in a move that will deny new employees the right to join existing defined benefit schemes, writes Dominic Coyle.

However, the deal will also see lower paid workers receiving a significant boost to their pensions.

The plan is currently being presented to staff around the State. If approved by workers, it is understood Bord na Móna will become the first semi-State company to abandon defined benefit pension arrangements - which guarantee a set pension calculated on the basis on the number of years served.

Any staff joining the company following the introduction of the new arrangement will instead be offered a defined contribution pension scheme - where the ultimate pension depends on the scale of contributions and their investment performance. This is generally considered by the pensions industry as an inferior arrangement.

Bord na Móna currently has two main pension funds - the General Employee Superannuation Scheme, open largely to managerial staff and which has a deficit of about €10 million, and a Regular Workers Employee Superannuation Scheme for other staff, which boasts a surplus of close to €30 million.

Discussions on reforming the company's pension schemes have been ongoing since last summer as the company struggled to meet the funding requirement for the "general" scheme laid down by the Pensions Board.

Unions at the group were also keen to address the situation of lower paid workers who had seen their occupational pension benefit halve since 2001 as a result of recent increases in the State pension.

"We have been paying 5 per cent of our pay into this company pension fund and we are getting less and less out of it all the time," said one employee at the company.

Under the current proposal, the company will inject funds into the scheme to wipe out the "general" scheme deficit and the two schemes will merge. Current members, including pensioners, will retain their existing benefits.

Members of the "regular" scheme will also benefit from an arrangement under which they will receive a minimum pension of 20 per cent of their final salary in addition to any State pension.