This is an important issue about which we wrote to the Minister on the 22 February. I don’t always post such correspondence simultaneously on our website so please read the letter here for a full overview of the matter.
RTE RETIRED STAFF ASSOCIATION
Dear Minister Martin,
Thank you for your letter of the 21st of January last relating to the proposed amendment to Regulation 20 of the RTÉ Defined Benefit Scheme.
Additional information has come to light which reinforces our determination to legally challenge any proposed change to regulation 20 of the RTE Superannuation Scheme.
Firstly, the Code of Practice for the Governance of State Bodies – Remuneration and Superannuation, clearly states that the administration costs of the superannuation schemes of Commercial State Bodies will be met by the State Body.
Quote Section 1.12
“Superannuation Schemes in Commercial State Bodies – Superannuation: Administration costs of these pension schemes (except for standard commercial fees) will be met by the State body.”
The proposed rule change would be a clear breach of the very guidelines issued by the Department of Public Expenditure and Reform in July 2021. Such a rule change would have serious implications for the tens of thousands of pensioners formerly employed in all the Commercial State Bodies.
Secondly, we have previously advised you that the proposed change to regulation 20 would be a breach of the scheme’s overriding Trust Document. It states that no regulation should be changed which would result in the transfer of the scheme’s assets to the employer. The 1984 Trust Indenture clearly states;
“No amendment of this deed or of the rules shall be made if it would result in the payment or transfer of any monies from the scheme to the principal employer.”
Clear evidence of the proposal to execute such a financial transfer of scheme assets is contained in the very letter from RTÉ, to your office, requesting the rule change.
“You are already aware of RTE’s own financial challenges and will know that as part of RTÉ’s strategy 2020–2024, RTÉ is seeking to deliver cost reductions of €60 million over the next three years 2020–2022. In this context €500,000 per annum is a material amount. On the other hand the scheme reported a surplus of €42.5 million at the 1st of January 2019 and to which €500,000 cost per annum is a less material amount.”
Thirdly, RTÉ provides misleading disclosure of the scale of asset transfers involved.
Their letter implies that the cost of administering the scheme will remain with RTÉ. RTÉ’s letter stated;
“RTÉ also provides the services of the Registered Administrator (R.A) and related staff costs through RTÉ’s Pension and Finance team at no cost to the Scheme. The services, while clearly providing a benefit to the Scheme at a cost to RTÉ, would not be included within the proposed change. RTÉ will continue to provide the R.A service at no charge to the Scheme.”
This is a grossly misleading statement. The author of the letter, RTÉ’s former Chief Financial Officer, was also a Scheme Trustee at the time. She was fully aware, at the time of writing, that the Trustees, following legal advice, had decided to outsource the Scheme Administration to a third party in the not too distant future. The cost of this will be multiples of the €500,000 advised to your department in the letter requesting the rule change.
The proposed regulation change would ensure that the assets of the scheme would be used to fund the administration of the scheme in the event that the administration was outsourced.
The regulation change proposed by RTÉ states;
“The fund shall meet all third-party costs and expenses of managing and administering the scheme. Such costs and expenses include but are not limited;
those arising from scheme administration pensioner payroll……”
This wording contradicts RTÉ’s assertion that the administration costs would not be included within the proposed change. “The services, while clearly providing a benefit to the Scheme at a cost to RTE, would not be included within the proposed change. RTÉ will continue to provide the R.A service at no charge to the Scheme.”
You have been advised by me, on behalf of the 1600 RTÉ pensioners, of this misleading statement by RTÉ in earlier correspondence.
Fourthly, RTÉ provided your department with a misleading estimation of the future administration costs of the scheme. I have previously informed you that the underlying motivations behind the RTÉ application is undoubtedly the fact that the administrative costs are likely to rise substantially in the future because of new IORP regulations introduced by the EU (IORP 11) and transposed into law in this country.
The Irish Association of pension funds have pointed out that this increased cost burden coming down the tracks.
“It is clear that implementation of the draft Code will lead to additional costs for schemes which will ultimately be borne by employers or members Schemes (sic) have already seen significant increases in compliance costs in recent years as a result of new requirements such as ECB reporting, and further increases in the regulatory fees have also been flagged. These additional costs undermine efforts to increase and improve pension provision.”
Response to the Pensions Authority’s Draft Code of Practice for Trustees of Occupational Pension Schemes from the Irish Association of Pension Funds
To what extent have considerations by your Department and NewEra taken into account these extra costs and their impact to potentially “undermine efforts to increase and improve pension provision”?
Fifthly and finally, RTÉ wrongly imply in their letter that this proposal has the support of the Trustees. “The trustees acknowledge RTE’s entitlement to make the amendment and will comply with the new regulation once it is approved.” The Trustees solely acknowledged that the regulations enable RTÉ to request a rule change. The Trustees have not endorsed this rule change.
The members of the scheme, are completely in the dark about your Department’s (and NewEra’s) response to these disclosures. If the proposed regulation change does get approval we will, through legal discovery, establish if the decision making process stands up to judicial review.
It is our intention to lobby all political parties to propose a resolution to annul any scheme amendment which provides for the transfer of assets of the RTÉ Superannuation scheme to the employer.
Again, I am formally requesting that the RTÉ Retired Staff Association be informed if and when there is a proposal to lay before the houses of the Oireachtas proposals to transfer the administrative costs of the RTÉ Defined Benefit Scheme from the employer to the assets of the scheme.