Concern at Aer Lingus pension proposals

There is concern over how certain aspects of new proposals which will attempt to plug a €722 million deficit in the Aer Lingus pension fund will work.

The pension deficit is viewed as a major obstacle to the Government’s plans to sell off its 25% stake in the airline as part of the troika programme for the sale of state assets.

The issue of the complex pension scheme has been the source of much controversy and talks began to try and resolve the issue last December.

The proposals, drawn up at the Labour Relations Commission, would start by freezing the pension plan so no further contributions are made and no benefits build up. Its assets, worth €1.4bn, would transfer to the NTMA.

In return, a bond portfolio would be issued, including some maturing over decades.

However, there are a number of problems. It is unclear what share of the liabilities each employer will have to cover, given that their financial situations vary and that airline maintenance firm SR Technics is defunct.

There are questions over who will pay for the shortfall if the NTMA bonds do not yield enough to meet pension obligations.

New, separate Dublin Airport Authority and Aer Lingus pension schemes must be negoti

ated for future pensions. Aer Lingus’ pension scheme is convoluted, being a multi-employer scheme.

Employers and trustees are seeking that the state pension be integrated with the aviation pension to reduce the burden on the superannuation scheme.