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THE BOARD AT Ireland’s largest newspaper group has found itself on the wrong side of the news lately.
On Monday, Independent News and Media (INM) held an uncomfortable extraordinary general meeting (EGM) at Dublin’s O’Callaghan Alexander Hotel to seek shareholder approval for a reduction of share capital, which would lead to the company’s first dividend payments since the financial crash.
Outside, about 100 former and current Irish Independent workers, along with trade unionists and other supporters, gathered to protest INM’s decision to stop paying into a defined benefit pension scheme, which would result in roughly a 70% reduction to the pensions for former staff, many of whom are yet to reach retirement age.
Inside, things were just as turbulent. The group’s chief executive Robert Pitt and chairman Leslie Buckley had an unusually public boardroom row the week before, reportedly over the purchase price of Newstalk, the Denis O’Brien-owned radio station. O’Brien is also the largest single shareholder in INM.
Buckley tried in vain to avoid the pensions problem during the EGM, but the issue was understandably hard to ignore, especially for shareholder-pensioners like ex-business reporter Martin Fitzpatrick.
According to a report in the Irish Independent, Fitzpatrick called the decision to pull out of the pension scheme as “one of the most shameful decisions” he had ever come across in his 50-year career.
The whole story has shone a light on a growing problem in Ireland – defined benefit pension schemes, like the one at INM, are grossly underfunded. This week, we’re looking at how they could be a ticking time bomb about to explode.
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Defined benefit pension schemes promise a set level of pension at retirement, normally based on your service or earnings near the end of your career. The benefits, or payouts, are fixed, so the contributions have to be adjusted from time to time to make sure the correct amount is being gathered before payment.
However, it’s important to note that such benefits are not guaranteed. If the scheme’s assets are not sufficient to pay the benefits, and the employer can’t meet the shortfall, promised benefits can be reduced.
However this is not the first time the board at INM has looked to slice its pensions scheme – and that’s partly the reason why the workers are so outraged. In 2013, the group received approval from the Pensions Authority to substantially reduce members’ accumulated sums.
It led to about a 40% reduction to their pension pots at the time. One former Independent journalist wrote in a Facebook post that the workers accepted this “as a necessary measure as the company was on the verge of collapse”.
‘Cash rich’
Nevertheless, the financial situation for INM today is very different. In the 2015 financial year, the company generated a pre-tax profit of over €37.4 million after the first up-tick in revenue for years.
After selling its remaining stake in Australia’s APN News and Media in 2015, the company was also left with a significant cash pile – even after paying off its debts. That money was earmarked for acquisitions. First it bought business magazine group Greer Publications.
Then it snapped up a 50% stake in Cars Ireland, a classifieds website for cars. A few months ago, it announced it was buying Celtic Media Group, which publishes six regional newspapers in Ireland.
If approved, that will bring the number of INM-owned local papers to 20. And yet INM is still expected to be sitting on €86 million by the end of this year. A Newstalk acquisition would have put that money to work.
Investors will be keen to create value from that cash – especially after Davy analysts warned that the management’s ability to do so will “determine the future trajectory of the group”.
Ex-Independent journalists argue that they are being fed to the wolves by the “cash rich” company so it can free up this money pile and pay out dividends to shareholders like O’Brien, already one of Ireland’s richest few people.
Pensions time bomb
The INM problem has highlighted a worrying underlying issue in Ireland – other troubled defined pension schemes could be wound up too, with little warning. INM’s retirement obligations grew by more than €20 million in six months to €106.8 million by 30 June 2016.
This was largely due to low interest rates and a struggle to meet standards set out by the Pensions Act. Recent research by consultancy firm LCP Ireland found that the combined deficit in defined benefit schemes at Ireland’s biggest private and public sector companies surged by more than 160% in the first nine months of the year, despite a number of cuts to benefits and a reduction in contributions.
The combined shortfall more than doubled to almost €7 billion by November of this year. These growing debts put pressure on companies’ balance sheets and impact their ability to pay out to shareholders. Members of such schemes could stand to lose out on pension promises if companies struggle to fund them and come under pressure from investors.
Different to the UK
The INM situation has also highlighted the fact that there is no legislation in Ireland to protect pensioners when profitable companies decide to stop paying into their pension funds. In the UK, for example, it’s not possible for solvent companies to simply walk away from their pensions obligations.
The Sunday Times recently wrote that the Trinity Mirror newspaper group in the UK is in a similar situation as INM, however it didn’t have the option of simply wrapping up its scheme because “pension funding rules in the UK are far more stringent that in the Republic of Ireland”.
National Union of Journalists’ Irish secretary Seamus Dooley called on the Minister for Communications Denis Naughten to consider the pensions controversy when deciding whether to give the all-clear in INM’s acquisition of Celtic Media. Meanwhile, INM’s restructuring of its balance sheet will go before the High Court, where the separate pensions issue could rear its head as well.
Minister for Social Protection Leo Varadkar has said he approached the attorney general to see if he can intervene and ask the court to strike a similar deal as was done with Aer Lingus, where the company negotiated with trustees before going ahead with its sale to IAG. The outcome of how INM handles its pensions problem could set the stage for other funds in difficulty.
Written by Conor McMahon and posted on Fora.ie
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I’d love one to drive home after the night shift, I could have a quick snooze and “hopefully” I won’t kill anyone.
Father Ted had one years ago!
*Tesla
People kill and injure thousands of other people each year on the worlds roads- computers are bound to do better-
always a good day when you dont hit someone.
Except for the Micra / Yaris driver who takes half an hour to go round a corner
Perhaps it might stop them savages from running down people at bus stops and then choping the injured with and ax!
Fingers crossed, be grand they said……
rise of the machines
this is awesome. My next car will be a Tesla.
Honestly I don’t see how one of these vehicles could be better than a competent driver. They’re susceptible to all kinds of software and hardware issues which could cause fatal accidents and they could be vulnerable to unsolicited electronic access. Not to mention the fact that cars will become much more expensive to manufacture and maintain as a result.
I think in theory it’s a good idea but in practice it will fail.
ya gotta start somewhere. otherwise progress will never be made!
“a motorised carriage fuelled by highly combustible liquid!? I think in theory it’s a good idea but in practice it will fail.” – Some dude, circa 1900
You can’t see how because you don’t know the first thing about machine learning. Google ‘s cars are already safer than competent drivers.
Why would cars that don’t need steering wheels and peddles be more expensive?
I’m pretty sure a full suite of computers, sensors and AI programming are more expensive than a steering wheel and a couple of peddles Jake.
Hólec, for every one design out there that succeeds there’s a ton more that fail. How are those flying car designs which were supposed to revolutionise travel coming along? Hell even jetpacks were toted as the personal transport revolution and promptly dropped.
Jason, open up to the spirit of endeavour.
Ever tried. Ever failed. No matter. Try Again. Fail again. Fail better.
“I’m pretty sure a full suite of computers, sensors and AI programming are more expensive than a steering wheel and a couple of peddles Jake”
So Tesla uses a system of radar and cameras. They’re not that expensive. They were included with all of their models and did not increase the price of the car. Tesla will be selling a $35K model starting next year and it too will include the radar and cameras.
Then there is the fact that Tesla’s are electric cars and cost fukc all to run compared to an ICE.
As for computers, cars already have on-board computers and have since the 1980s. The biggest problem facing manufacturers of self-driving cars is the software, not hardware.
‘They’re susceptible to all kinds of software and hardware issues which could cause fatal accidents and they could be vulnerable to unsolicited electronic access.’
You could say the same of human drivers.
Another one of these cars that Feds could switch off remotely and lock you in side or worse again crash it into something.
Michael Hastings, ‘Rolling Stone’ Contributor,died at the age of 33
Denmark is slowly retreating from some of its most ambitious, self-regarding climate initiatives. In an unforeseen attack of common sense, the government is readying to end its generous tax breaks for citizens who buy low-carbon vehicles because of the expense imposed on the public purse.
This will triple the retail price of electric cars like the popular Tesla (Model X pictured above) and remove their competitive price advantage against standard fossil fuel-powered models.
A draft budget proposed last week would extend an existing 180 per cent automobile tax to electric vehicles and place their pricing alongside all other standard competitors.
HT Simon Kent Breitbart
To be honest, I’m glad they’re pulling support for electrical vehicles. Evidence has shown that the production processes involved in making these electrical cars is even worse for the environment than standard hydrocarbon vehicles. That and they still contribute negatively to CO2 emissions unless the entire grid is powered by sustainable fuels (which almost nobody has achieved).
The only vehicles that stand a reasonable chance of having a positive effect are hydrogen cars and even then the production process for hydrogen fuel requires gas.
This is what the Chinese get from all this green nonsense, just one on the many many articles on this pollution available http://i.dailymail.co.uk/i/pix/2011/01/28/article-1350811-0CF36063000005DC-625_634x286.jpg
I wish I was a kid again so that when I grew up I coud be like Elon Musk.
I’m honestly more concerned about it ‘self-parking’ itself into the side of the Ferrari or the Porsche that my neighbours in the garage drive than it hitting a person.
Try not parking it in your neighbours garage.
With increased interest in autonomous vehicles – everyone and their mother seems to be looking into autonomous driving – at what point do pedestrians themselves become responsible for crossing a road out side of pedestrian/zebra crossings. No matter how good software and sensor arrays get they can’t predict or be responsible for stupidity.
They can predict about as well as a human diver and react far far quicker
And they’re unlikely to down ten pints, smoke an ounce of weed before attempting to drive home.
did he not launch these on the Simpsons a few months back
have your say