Pfizer Inc. (NYSE:PFE) is rethinking its pension plan in Ireland which it describes as “not sustainable,” and since it is only increasing costs the company now wants to halt it. The affected employees will be integrated into a defined contribution scheme.
Information from spokeswoman Joan Campion indicates that the closure of the employee non-contributory defined benefit pension plans will kick off at the beginning of 2018. The company’s move has resulted from its desire to protect the stability of the program. Campion explained that the cost of funding these non-contributory plans has shot up three times between 2012 and 2014 hence they have become unsustainable.
Nevertheless, the trade union Siptu is not for the idea of calling off the plans. Its argument before the country’s Labor Court is that the programs are stable and should be retained. But Pfizer will have none of the union’s conviction given that the company has had to spend an additional €10 million over five years to uphold the plans which does not make sense regarding costs.
As a result of the disagreement both Pfizer and Siptu have been directed by the court to harmonize the issue and work together for a common objective that will not hurt any of them. The court has advised them to come up with a plan that will meet the dual purpose of aligning the company’s needs and the benefits expected to be in the scheme.
Apparently, 2,200 of the 3,200 of Pfizer employees in Ireland are already integrated into the defined contribution plan. Hence, the upcoming change will only be felt by a small batch of people, mainly those at Ringaskiddy and Little Island plants as well as global financial and sales personnel.
Nonetheless, the company’s employees in the US have both the defined benefit and defined contribution plans. The company now wants to move employees from the defined benefit plans to a savings plan, a move that is expected to take place early 2018.