Mr. Dermot O'Leary:

I thank the committee for providing us with the opportunity to outline our concerns regarding the problems associated with both the regular wages scheme and the 1951 superannuation scheme. I come before the committee in my role as general secretary of the NBRU, the largest front-line representative union in CIÉ and the only dedicated transport union in the country. However, I am also extremely conscious that we have a pivotal role to play in potentially resolving the issues associated with both schemes on behalf of the 8,600 staff across the CIÉ group who are members of the pension schemes. There are 16,700 people dependent on the scheme in total, between actives, deferred and pensioners.

The scheme structure is unique in that it does not fund pension in payment through annuities or approved retirement funds, ARFs, but pays for them directly from the scheme. Before moving on to some of the detail on both schemes, I should remind the committee and other observers that successive Administrations are responsible to some degree for a number of interventions on pensions over the past 30 years. These include the Pensions Act 1990, which introduced the actuarial funding certificate; the Social Welfare and Pensions Act 2005, which amended the 1990 Act and introduced obligations for off-track schemes; accounting standard FRS 102, introduced on 1 January 2015, which increased the liabilities through a change in accounting methodology; and the risk reserve, which was introduced on 1 January 2017 and which is a requirement to hold an extra 10% of the value of liabilities as a buffer.

Another interesting aspect is section 7(3) of the Pension Act 2005, which takes a long-term view of pensions and provides that the assets of the scheme must be invested in a manner designed to ensure the security, quality, liquidity and profitability of the portfolio having regard to the nature and duration of the expected liabilities of the scheme. Unfortunately, the pension schemes are subject to a short-term annual valuation, or end-of-year snapshot, which dictates the status of both schemes. Consideration may have to be given to decoupling from the minimum funding standard, MFS, to allow greater solution flexibility for all concerned.

The recent discourse regarding pension issues has been shrouded in accusation and counter-accusation. A large amount of distrust has been shown between the parties ever since the controversy over the CIÉ group placing both schemes within a funding proposal in 2013 without the knowledge of either the members of the schemes or the representative trade unions. The revelation regarding the funding proposal, which broke in 2015, led the unions to immediately seek meetings with the CIÉ group to ascertain what exactly were the issues with the schemes.

I should point out before moving on, that I am not, nor do I profess to be, an expert in pensions, actuarial analysis or all of the machinations associated with the stock market. I should also point out that we as a representative trade union are very central to practically all of the industrial relations issues across the companies in the CIÉ group. We have also been very involved in successfully staving off the worst excesses of the privatisation agenda of successive Governments. I make this point to illustrate that while we have a comprehensive knowledge and no little expertise in the sphere of industrial relations issues and those which directly affect our members, the intricacies associated with pensions occasionally require outside assistance.

In line with our trade union colleagues, we have engaged pensions advisers to assist in conducting an in-depth investigation of all of the issues surrounding the problems with both schemes. Their analysis became the basis for our initial engagements at the Workplace Relations Commission throughout 2016 and 2017. The NBRU's position on the issues at hand is simple enough to understand. We want to achieve a solution whereby the pension benefits and entitlements for which members of both CIÉ pension schemes have paid are honoured in full.

The background to the pension row dates back to 2009, when the CIÉ group approached the unions to discuss the then serious deficits in both schemes. At that time, these deficits amounted to approximately €500 million, of which the regular wages scheme totalled €150 million and the 1951 scheme totalled €350 million. The option presented to the union from then to 2010 and 2011 comprised of no pension increases for foreseeable future, no pensionable salary increases for three years and increased contributions from employees. The alternative suggested at that time was a decrease to pension benefits as staff retired. The unions resisted these suggested changes, though it should be noted that neither pensions nor salaries increased, at least up to 2016. There was one consistent line from the trade unions during the discussions in 2010 and 2011 that still has significant relevance today. The issue concerned was the level of contributions from the CIÉ subsidiary companies. Through a statutory instrument, the contributions were set at 3.6 times for the 1951 scheme, currently 2.7, and 2.7 for the regular wages scheme, currently 2.3. The argument put forward by the unions was that if and when the companies met the maximum figure permitted by the statutory instrument, a review of contribution levels would automatically be triggered.

What is significant here is the actuarial report of 2009, hereafter referred to as "the 2009 piece". This recommended that CIÉ should increase its contributions to 4.6 times for the 1951 scheme and 3.3 times for the regular wages scheme. CIÉ chose not to act on this recommendation. It is our contention that if the group had contributed to the maximum permitted under the statutory instrument or the recommended level suggested by its own actuary in 2009, the deficit in both schemes might now be significantly less.

Yet another concern is the 1994 piece, which is also central to the debate between the parties. It has obviously been interpreted differently by each side. The 1994 piece revolves around the solvency of the pension schemes and the interpretation of SI 323/2000, which goes to the very heart of the issues between the unions and the CIÉ group. The CIÉ group has described the issue as single-year solvency on the basis of the requirement of the actuary to make an annual report to the CIÉ Board. This is covered by SI 323/2000, which states, "In every year the Board shall contribute to the Fund such sum as the Board after consulting the Actuary determines to be necessary to support and maintain the solvency of the Fund." It is also fair to point out that the same rule states:

... if the contribution determined by the Board under paragraph (1) to be necessary to support and maintain the solvency of the Fund (exclusive of any contributions arising under Rule 21(9)(b), Rule 29(1)(c) or Rule 39) will in any period exceed 3.6 times the contributions payable by the members during that period [I note that this refers to the 1951 scheme], the contributions payable by the Board and the members shall be reviewed.

This brings us back to 2010 and 2011, when the unions rejected an increase in members' contributions.

The NBRU, along with other unions, is not able to draw definitive legal conclusions on the 1994 piece, hence the necessity to seek independent legal advice to ascertain the validity or otherwise of our view that the solvency of the schemes should be maintained by the CIÉ board. We have also sought advice to determine the quantum of underfunding if, as we are suggesting, the scheme has been underfunded. We have also raised concerns that the CIÉ schemes are regarded as private pensions from a regulatory perspective, yet the governance of the schemes involves a mix of committees, trustees, statutory instruments and board and Ministerial oversight, all of which are similar to pensions in the public sector. The 1951 scheme also carries the State's burden concerning approximately 900 members who are D1 social insurance contributors and who therefore qualify for little or no State benefits, including the old age pension.

Finally, I wish to draw the committee's attention to the letter the NBRU wrote to the CIÉ board. It is included in our submitted documents. In this letter, we set out our concerns about how the debate had become skewed away from addressing the core issues and has descended into accusation, counter-accusation and acrimony. This correspondence has suggested the establishment of a forum, not necessarily industrial relations, whereby all stakeholders would engage under an agreed chairperson to fully expose all of the issues. This would allow us to agree on a satisfactory conclusion for the benefit of all the members of both pension schemes.