Ulster Bank owners, Royal Bank of Scotland (RBS) is set to slash staff retirement benefits in a bid to save hundreds of millions of pounds in future liabilities.
RBS's announcement that it is capping its final salary pension scheme sparked a furious response from the trade union Unite, which said the move “added insult to injury” in the wake of the bumper pension package paid out to Fred Goodwin, the bank's disgraced former chief executive.
The Ulster Bank employs around 7,000 people in Ireland, including around 2,400 in Northern Ireland. Many are expected to be affected by the changes.
A spokesman for the bank said: “Further to an announcement today by RBS Group, Ulster Bank confirms the intention to undertake a series of proposed changes to its pension schemes.
“Ulster Bank’s defined benefit schemes will continue. However in light of the current economic situation and to control the cost and future liabilities to the group, the following changes are necessary — capping employees annual increase in pensionable pay by 2% or the rate of inflation, whichever is lower.
“From November 1, the defined benefit scheme will be closed to new employees and will be replaced by a defined contribution scheme.
“In line with new UK legislation and with effect from 6th April 2010, the minimum age for retirement will increase from 50 to 55 in Northern Ireland
“We will now enter a period of discussion with employee representatives.”
The move is expected to save £1m in annual costs and cut future liabilities by £500m. The deficit of the scheme currently stands at £800m.
Neil Roden, the head of human resources at RBS, said: “The rising cost of pension provision is an issue for RBS and for all companies at this time.”
A third of the group's employees — about 60,000 — will be affected by the change to the scheme, which was closed to new members in 2006.
Rob MacGregor, a Unite national officer, said the union would “support its members in any action they choose to take to defend their pensions”.