Intel to close “unsustainable” pension scheme for longer-term staff

The company said that the cuts are being driven by ‘factors beyond its control’.

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The Intel Ireland plant in Leixlip, Co Kildare


Source: Rollingnews.ie

TECH GIANT INTEL is to close a pension scheme for its Irish workers in the coming months.

The company’s Irish arm Intel Ireland today informed employees at its Leixlip, Co Kildare, base via email that the action will happen  from 1 July.

Speaking in that email, general manager of Intel Ireland Eamonn Sinnott said that the current defined benefit scheme to which an estimated 2,500 of the company’s employees belong is “unsustainable”.

“Our direct benefit costs have risen exponentially from 5.6% in 2001 to 15.9% to date,” Sinnott said.

If we don’t take action now, these costs will further double to 30.1%.
These increases are driven by factors beyond our control and are subject to further unpredictable increases in the future.

Sinnott added that the company would be “contributing more than $100 million (€94.3 million)” towards preserving the benefits already built up by employees to date.

Those employees who were in the defined benefit scheme will move to a defined contribution scheme instead from July.

Defined benefit schemes are ones in which the final payoff is calculated by formula, and therefore fixed and known in advance.

In defined contribution schemes, both the employer and the employee contribute to an investment fund which is used to buy a pension at retirement.

While the latter is inherently less predictable than the defined benefit variant, such a move has become “quite commonplace among companies” in recent years according to Jerry Moriarty of the Irish Association of Pension Funds.

Staff in Leixlip were this afternoon being briefed as to how exactly the pension cuts would affect their own funds.

The defined benefit scheme at Intel had been in operation since the company’s arrival in Ireland 28 years ago. However, it had been closed to new employees since 2012.

Last year Intel began the process of cutting 11% of its workforce, or 12,000 positions, worldwide, a move which saw roughly 500 redundancies in the Irish workforce.

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