Retailer seeks to reduce exposure to fund that was €12 million in deficit at end 2012
Brown Thomas managing director Stephen Sealey: “We have commenced a consultation process with the trustees of the defined benefit scheme and the members about changes to the scheme to ensure its long-term sustainability.”
Retailer Brown Thomas is proposing a number of changes to its general defined benefit (DB) pension scheme aimed at tackling a €12 million deficit and reducing the annual cost of the fund to the company, The Irish Times has learned.
It is understood that Brown Thomas has kicked off a consultation process with the trustees and members of the DB pension scheme with a view to reducing certain benefits while also maximising the returns of the fund.
This is with a view to submitting a section 50 proposal to the Pensions Board on how the deficit in the scheme will be addressed.
The scheme was €12 million in the red at the end of December 2012 and it is understood that Brown Thomas was required to provide an additional €800,000 to the fund to help it meet its obligations.
It is believed that this annual top-up could rise significantly in the years ahead if measures are not agreed to contain benefits and costs.
Among those being sought by the company is a proposal to remove the guaranteed annual pension increase. Future increases would be discretionary.
While pensioners have been entitled to an annual rise in their income, staff at Brown Thomas have endured a pay freeze for the past four years against a backdrop of reduced consumer spending during the downturn. Even if the new measures are agreed, it is believed that Brown Thomas will still be required to provide a substantial six-figure annual top-up to the scheme.
When contacted, Brown Thomas managing director Stephen Sealey said: “We have commenced a consultation process with the trustees of the defined benefit scheme and the members about changes to the scheme to ensure its long-term sustainability.”
The defined benefit scheme has been closed to new entrants for a number of years but 12 per cent of the company’s 1,100 directly employed staff remain as members.
It is understood that Brown Thomas makes an employer’s contribution of 18.9 per cent annually to the DB scheme with staff contributing 5 per cent.