The vast majority of staff at Ulster Bank have agreed to sign up to new contracts under which they will receive a lump sum worth 10 per cent of annual salary in return for accepting a cap on any future increases in their pensionable pay.
Some 4,264, or 82 per cent of 5,200 staff who were eligible for the new terms and conditions offered by the bank, agreed to the contracts by last Friday’s deadline.
Under the new contracts, pensionable pay will be capped at 2 per cent, meaning that even if staff receive larger pay increases, only a maximum of 2 per cent in any year would be used when calculating their pension.
Ulster Bank ended negotiations with the Irish Bank Officials’ Association (IBOA) over the proposed changes to the staff pay and pension scheme, choosing instead to engage directly with employees.
The bank said in a statement that it had “communicated directly with our employees regarding the final outcome of the offer of new terms and conditions”. A bank spokeswoman declined to comment further.
IBOA general secretary Larry Broderick said that the union would proceed with its legal action for almost one fifth of staff who have not accepted the changes.
The union claims that all staff are entitled to the 10 per cent lump sum payment under existing contracts and that the bank’s parent, Royal Bank of Scotland (RBS), which is 84 per cent owned by the UK government, has already made the payment to staff without any preconditions.
The IBOA has lodged legal papers with the Rights Commissioner in the Republic alleging Ulster Bank made illegal deductions from wages in pursuit of its claim. The union is taking a parallel legal action in Northern Ireland.
In addition to cutting back on benefits to staff in the bank’s final-salary pension scheme, Ulster Bank is planning to close the defined benefit pension scheme to new members. Employees on a defined benefit pension can remain in that scheme or join a defined contribution scheme.
The IBOA had argued that staff may benefit in the short term with the lump sum payment but they would lose out over time with the changes to the pension scheme.
The trustees of the pension scheme told employees this month that the bank intended to reduce the scheme’s future accrual rate for members from one sixtieth of final salary for every year in the scheme to one eightieth per year.
Bank chief executive Cormac McCarthy told managers in an internal circular that pension changes were “being made in the context of the operating environment we face and the long-term interests of our business”. The bank made an operating loss of £93 million (€104 million) in the first nine months of the year.
“The ongoing cost of supporting a defined benefit scheme for all existing employees in its present form is no longer sustainable,” he told managers.
