IRELAND/UK  - IBOA, the finance trade union, says members working for AIB Group have voted to accept the proposed changes to the defined benefit (DB) and hybrid pension schemes, following a formal ballot.

A third-party mediator, Kevin Foley, made a series of recommendations in December on the future of the pension funds, following a breakdown in negotiations between the union and the bank. (See earlier IPE article: Irish roundup: Bank of Ireland, AIB)

Following the results of the ballot, members of the DB and hybrid schemes in Ireland and the DB scheme in the UK will have their pensionable salary calculated using an average of the last five years of service, instead of the final year. This will be effective as of 30 June 2009, in Ireland, and 30 September 2009 in the UK.

In addition, members of the DB schemes will now have to make a choice over the coming weeks on whether to raise contributions or cut accrual rate. They have the option of either making contributions to the scheme at 4% from 1 April 2010 and increasing it to 5% from April 2011, or they can change their accrual rate from 1/60th to 1/75th from 1 April 2010, although past service will remain at 1/60th up to 31 March 2010.

IBOA noted its advisers believe the value of the member contribution "provides fair value by maintaining the accrual rate at 1/60th" but said members should make a decision on an informed basis because individual circumstances are different.

However, IBOA also added: "The ballot result is conditional on the bank providing adequate funding for the pension schemes. IBOA members have risen to the challenge - now the Bank has to reciprocate."

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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