The ESB, its unions, pension trustees and the Government will meet next week to defuse the row over the €1.7 billion hole in its workers' retirement fund.
Workers at the State- owned energy company voted this week in favour of striking as unions and management remained at odds over the scheme’s solvency.
It emerged yesterday that the ESB, its group of unions, pension trustees, and representatives of four Government departments – Communications, Finance, Public Expenditure and Social Protection – will meet on Tuesday to discuss the problem.
Confirming the meeting, secretary general of the group of unions Brendan Ogle dismissed claims that taxpayers' money would be used to shore up the pension plan.
“As far as we are concerned, the liability for the scheme lies fairly and squarely with the ESB,” he said.
Mr Ogle added that papers that have emerged in a High Court case taken against the company by four staff support this view.
The unions say the ESB’s pension fund would have a €1.7 billion shortfall if it were wound up, leaving staff with 4 per cent of their benefits, but the company says this is not the case.
The four workers who have taken the court case are, amongst other things, seeking to halt payment of dividends to the Government until the company has tackled the pension shortfall.
The unions’ claim about the scheme’s solvency is based on the minimum funding standard, which calculates a defined benefit pension fund’s assets and liabilities if it were wound up. They argue the ESB unilaterally decided to change the scheme from defined benefit to defined contribution in 2011, after unions and management agreed terms to plug a €2 billion deficit that emerged in 2010. This lets the company off the hook for future liabilities.
The ESB itself says that the minimum funding standard should not apply as the pension scheme is based on a specific piece of legislation passed in the 1940s. It also points out that it has already won approval from the regulator, the Pensions Board, for a plan that will plug the gap by 2018.
News of next week's meeting broke as the company announced it has sold its 50 per cent stake in a power plant at Marchwood, near Southampton, England, to German reinsurer, Munich Re.
None of the parties involved revealed the sale price, but sources yesterday suggested it was around €160 million. The proceeds will go towards a special €400 million dividend that the Government is seeking from the ESB next year. The company is paying a total of €139 million to the State from its 2012 profits
Marchwood Power was a joint venture between ESB International and Scottish & Southern Energy (SSE), owner of Irish rival, Airtricity. According to figures published at the time the pair agreed the partnership, it cost €560 million to build.
It was commissioned in 2009. A year earlier, Marchwood featured as part of the then ESB chief executive Pádraig McManus’s plans to expand outside the Republic, and particularly in Britain.
Its sale is part of the overall Government plan to dispose of a number of State assets, including Bord Gáis Energy.
