Independent News & Media is planning to make phased contributions of more than €50 million to defined-contribution pension schemes.
The newspaper publisher reached an agreement with trustees of two of the company's defined-benefit pension schemes that will "bring certainty to the company regarding its future obligations in respect of its principal Irish newspaper-publishing business", INM says.
Between 2013 and 2023, INM has committed to pay more than €70 million in respect of members of the defined-benefit schemes. The is in addition to the 5 per cent of issued share capital transferred to compensate members whose pension entitlements had been reduced as a result of the company’s restructuring in 2013.
Under the agreement announced on Friday, each member will have their own ring-fenced retirement account within the defined-contribution scheme.
“This will give all members greater security and control over their pension savings in a far more sustainable pension arrangement,” a company statement said.
A company source described the agreement as a significant gain for trustees and members, as the trustees were operating from a very weak legal position.
It is believed that, for members over the age of 62, an ex-gratia payment of €4 million in aggregate has been agreed. This should mean that the total funds received by members will be sufficient to enable them to purchase annuities of 80 per cent to 90 per cent of existing pension expectations, depending on their age and the market conditions at the date of their retirement.
The source confirmed that the agreement removes uncertainty for members about future employer contributions.
The amount of money secured by the trustees is believed to exceed what is required under the trust deed and the minimum funding standard amount.
The newspaper publisher projects investment of of roughly €115 million in all of its schemes between 2013 and 2023.
“Details of each member’s pension pot and entitlements under the new agreement will be communicated to them in a letter issued of the next couple of days,” the statement continued.
‘Significant breakthrough’
Acting general secretary of the National Union of Journalists Séamus Dooley said: “While the union remains opposed to the closure of the schemes by a solvent and profitable company, the decision to continue pension contributions until 2023 is a positive development and is a significant breakthrough following a strong trade union campaign.
“The agreement highlights the need for immediate legislation to prevent solvent companies unilaterally winding up defined-benefit company schemes.
“We will be seeking meetings with management and with the trustees. The trustees had already made a commitment to briefing all scheme members on the outcome of their talks with the company.”
Siptu services division organiser Ethel Buckley backed up the NUJ’s criticism of the government: “The closure of a defined-benefit scheme in a financially solvent and profitable company such as Independent News & Media is a direct consequence of the failure of successive governments to legislate for the proper protection of the rights of workers who invested their life’s savings in such plans.”
Davy analysts Joseph Quinn and David Jennings said in a note to clients that “the agreement means the group can now proceed with any capital restructuring that it may have planned. Independent News & Media had a net cash position of €85 million at the end of 2016 and is on track for this figure to be close to €100 million by the end of this year, post libel and pension payouts.
“This would equate to 77 per cent of the group’s market capitalisation as per last night.”
