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9
NEWS
Oct/Nov 2011 www.esb.ie/em
Interview with Paul Duignan, Manager – Project Pensions
A quiet revolution has been taking place within ESB over the past year, one which will see the introduction of a unique new form of pension scheme to Ireland.
FOLLOWING THE Pension Agreement which received the overwhelming acceptance of staff in a ballot in August 2010 Project Pensions was established by ESB to implement the agreed changes.
Paul Duignan explained it was clear that a huge body of work was underway by a small specialist project group “Pensions are complex and the specialist skills to deliver and implement this project is only possible due to the dedication of the Project Team, supported by ICT staff,” said Paul.
While it is a multi faceted project involving legal and regulatory changes and a move to a new administration platform, there is real commitment on this project to ensuring members understand what is involved in this transition particularly for members who joined ESB after April ’95 (paying Class A PRSI) – “These members will have an important decision to make in the coming weeks,” explained Paul, “that is, whether to leave ESB Defined Benefit Scheme and move to the ESB DC Scheme.”
For all staff who are members of the Scheme the basis of calculating their project benefits will move from what is known as a final salary arrangement to a Career Average Revaluation Earning (CARE) Scheme from 1st January 2012. “All active member will have recently received a benefit statement showing their projected benefits, it is important that they review these to make sure their personal details and service record is correct,” said Paul.
CARE is relatively new to Ireland, Paul how does this work?
“Under CARE your project benefits are calculated based on your Pensionable Earning during each year of your future ESB service. Each year 1/80 of your Net Pensionable Salary is added to your projected pension and 3/80 of your Pensionable Salary to your project Lump sum. The pension blocks you build up will be revalued annually”. The new member booklet explains how CARE works very well, these booklets will shortly be issued to all members.
The maximum amount of service a member can build up appears to be 40 years. Is it possible for members to buy added years or notional service and should they look to do so before the end of the year?
“Yes, members can still buy notional services and the cost makes no difference if it is purchased before or after CARE.”
What’s involved in the new administration platform?
“Our current administration system was not capable of administering CARE without significant upgrading. One of the first tasks of the project team was to look at the options available for administrating the scheme as it moves into its new phase of CARE and closed to new entrants.”
“ICT were a great support to the project team in assessing the different options available. Following full consideration of all the options the project team recommended moving the administration of the scheme to a purchased managed service and following a EU wide procurement exercise Capita Hartshead were approved by the Project Board. “ESB Pensions will still be very involved in the running of the Scheme and will have a role in overseeing Capita Hartshead as they undertake the day to day administration of member’s benefits.”
Post April’ 95 (PRSI - Class A) members will shortly have to make an important decision, what help will be available to these members?
“All members who have this option will receive an information pack from ESB Pensions, with information about both schemes (DB- CARE and DC) and a comparison of the two schemes. Country wide member presentations are taking place during October for these members. There will be a transition website http://my-esbpension.esb.ie/ and of course ESB Pension staff will be on hand to answer any member queries. Members will have until 14th November 2011 to exercise their options; otherwise they will remain in the Defined Benefit Pension Scheme which will transition to CARE on 1st January 2012.”
“There is no right or wrong answer to this decision as no one knows what the future holds, just a personal choice for the member. The decision to opt to join the DC Scheme is the member’s and it is important that they read the communication supplied to them, attend the member presentation and to seek independent financial advice from a qualified and regulated financial advisor.”
For the majority of members who joined the scheme before April ’95, they will receive the members CARE booklet in the coming weeks which will explain in detail how CARE will operate.
Do any of the changes described here effect our current pensioners?
“No, the changes discussed here effect our active members only. The move to CARE and the option to leave the DB scheme for some members has no impact on our pensioners.”
