RE – Pension increase update, CFO and conflict of interest and approval by Minister Catherine Martin’s office of a raid on our pension scheme.
The RTÉRSA Chair, Stephanie Fitzpatrick, recently sent a letter (here) to Ms Siún Ní Raghallaigh, RTÉ’s Chair, regarding the appointment of a replacement RTÉSA (RTÉ Superannuation Scheme) Trustee following the resignation of Richard Collins which coincided with his departure from the post of Chief Financial Officer (CFO) at the station. See here the text of the letter which makes the argument that a CFO should not be a pension trustee as the two roles have potentially conflicting objectives.
We subsequently received an unprecedented invitation to meet on Oct 26th with Ms Ní Raghallaigh and Ms Paula Mullooly, RTÉ’s Director of Legal Affairs who was Interim Chair of the Superannuation Scheme. As Tony O’Connor, Vice Chair RTÉRSA was unavailable, Joe Little, a new member of the committee, accompanied Stephanie Fitzpatrick.
The meeting lasted 35 minutes, was business-like and began with a discussion of pension increases. (We learned afterwards that while we were in session, RTÉ’s website had announced that Ms Mullooly is to leave the organisation at the end of the year).
Ms Mullooly confirmed that the Trustees’ request for a 2.5% increase backdated from January 2022 is now with Minister Paschal Donohoe’s office having been approved by Minister Catherine Martin. The Trustees’ subsequent request to Minister Martin’s office for a 4% increase backdated to Jan 2023 has now been sent by NewERA to RTÉ along with a number of questions.
(New Economy and Recovery Authority – NewERA – provides financial and commercial advice to Government Ministers and Departments in relation to their shareholdings in State companies across a range of sectors. – NewERA/NTMA website)
RTÉ assured us that it has commissioned a specialist consultancy firm to ensure that its reply to NewERA is not delayed by the workload facing the broadcaster as it develops its ongoing programme of reform. Its delegation indicated that the consultant will be using RTÉ’s own recently devised risk assessment tool as the basis for the final response.
Your RTÉRSA delegation outlined a number of points:
- Pension payments to Scheme members have traditionally been pegged to national pay agreements and their equivalents.
- Many members have written undertakings from RTÉ that their pay would rise in line with national wage agreements and/or RTÉ staff pay deals.
- Generally, the Scheme provides RTÉ pensioners with their only pension income. This is because contributing members have been debarred from paying a full PRSI stamp and this disqualifies them from the State Pension.
- In the 15 years since 2008, our members have received a meagre 2% increase. 2022 figures from the Scheme highlight the shameful fact that 550 members – that’s 34%, – or over one-third of us – are on an average RTÉ pension of €12,383 which equates to €238 a week. Next January they’ll getting €44 a week less than what Contributory State Pensioners will be receiving.
- To rub salt into the wounds, our many impoverished members qualify for none of the packages and benefits to which State Pensioners are entitled.
- According to the RTÉ Benevolent Society, as often as twice a year, a group of up to 30 pensioners and the spouses of deceased members depend on help from its fuel scheme to heat their homes in colder months.
- The real value of our pensions has been drastically eroded by inflation. Between 2008 and October 2023, the Consumer Price Index has risen by 22.8%. Taking the 2% increase into account, our members are almost 21% poorer in real terms than they were 15 years ago.
- Many of our members fear that their pensions will be further reduced by the current crisis over payments and the inadequacy of financial controls at RTÉ. They worry that the government may now find it easier to reject applications for long-overdue pension increases.
- RTÉRSA will organise a national campaign on this issue if the current applications for increases of 2.5% and 4% are not successful.
We pointed to Benevolent Society statistics and said that many other members and widowed spouses living in poverty are too proud to seek charity. We said that many more are facing considerable anxiety about their financial prospects. To illustrate this, we read a letter a colleague had sent to Minister Donohoe urging him to approve our Trustees’ proposed increase immediately. Despite the member receiving slightly above the Scheme’s average pension, they had used up almost half their retirement lump sum in the past six years trying to make ends meet.
An extract reads:
“I am getting older and not only is my quality of life suffering, but I am also becoming very anxious about my future and how I am going to cope financially if this level of inflation continues and my pension does not keep pace. I put all my trust in the RTÉ Superannuation Scheme which I now bitterly regret.”
We pointed out that many members are angry at and distrustful of the authorities because their real income has been eroded by inflation while the Superannuation Scheme’s Fund has been accumulating a surplus of over €400m.
We reminded the RTÉ Chair that in her letter to the RTÉRSA dated April 8th 2023, she emphasised that RTÉ is very conscious of the fact that pensioners have only received one increase since 2008. She had added that the broadcaster “has, at every stage, supported the requests for increases, and continues to support and advocate for regular increases for pensioners of the Scheme”.
In the light of that promise, we asked RTÉ to reply to NewERA’s questions as speedily as possible and its delegation agreed to do so and agreed to revert with a timeline.
We also emphasised how crucial RTÉ’s voice is in ensuring that both of the increases (of 2.5% and 4%) recommended by the Scheme’s Trustees are signed off on as speedily as possible. The RTÉ Chair undertook to speak with Minister Catherine Martin about the matter when she met her. A meeting was scheduled within a week.
Chief Financial Officer (CFO) and conflict of interest
We then turned to the question of the letter we had sent to Ms Ní Raghallaigh highlighting the conflict of interest which arises when a company’s CFO is also a Trustee of its Superannuation Scheme. (see here)
The RTÉ Chair said that while she saw the point we were making, RTÉ needs to appoint a Trustee who has the financial expertise of a CFO. We highlighted that there are a number of financial managers in the organisation who have the skills required to discharge the responsibilities of a Scheme Trustee. We noted that, unlike a CFO, they’re not primarily responsible for safeguarding RTÉ’s assets.
We said that in an ideal scenario, the RTÉRSA would like to see an independent Chair of the Trustees (at present the independent Trustee is Jim Foley of Trustee Decisions – https://www.trusteedecisions.com/). The scenario would also include two RTÉ representatives, neither of whom should be the CFO. We reiterated our view that this would be best practice.
Mss Ní Raghallaigh and Mullooly responded that they are considering the matter. As an interim measure, given the vacancy on the Trustee Board caused by the recent resignation of RTÉ’s CFO, RTÉ would be appointing Mr Eamon Treacy (Human Resources), as its replacement representative on the Trustee Board. They said he was already a Trustee of the broadcaster’s “50/50” Pension Scheme and the Defined Contribution Pension Scheme.
We then raised the issue of RTÉ’s request to the government that the Scheme pay some of its own administration costs which, until now have been paid in full by RTÉ. We noted that after the initial request was refused, RTÉ had appealed the decision. This appeal had been with Minister Catherine Martin’s office for over a year.
We said that, having vigorously opposed RTÉ’s request over the last two years, RTÉRSA was shocked to learn recently that when Minister Martin was approving the application for a 2.5% increase to our Scheme’s members, she had also approved the change in regulations that would be required to shift the charge for the administration costs in question from RTÉ to the Scheme, backdated to January 2020.
The RTÉ delegation said it believed that the Scheme could afford the costs while RTÉ could not. We replied that the matter was a point of principle with our members and that RTÉ’s proposal had been unanimously rejected at last year’s AGM of our association..
We reiterated that the RTÉRSA and its members consider that RTÉ’s change of policy would represent a raid on our pension scheme. The cost over the life of the scheme has been estimated by NewERA to be in the region of €40million.
We emphasized that our association and sister organizations of pensioners of semi-state bodies believe RTÉ’s move, if successful, would set a very negative precedent for many similar schemes around the country.
RTÉRSA’s understanding is that this change will need the approval of both Houses of the Oireachtas. However, the RTÉ delegation told us it understood that the amendment can be signed off by Minister for DPER Paschal Donohoe.
Depending on how this unfolds in the coming months, we may need to call on members again for assistance in campaigning against this change which cannot be construed as being in the interests of the members of the Scheme.
The RTÉ delegation emphasised that the public service broadcaster regards its pensioners as important stakeholders. We emphasised that it will suffer reputational damage if it does not discharge its responsibilities to its 1600+ pensioners in the Superannuation Scheme.