Airline defends pensions decision

Aer Lingus has defended its decision not to up its €110m funding for a staff pension scheme saying it was never required to deliver 100% coordinated coverage.

The airline is embroiled in a prolonged dispute with unions over how to address an almost €800m shortfall in the Irish Airline Superannuation Scheme (IASS).

Proposals on how to address that shortfall have been formulated by the trustees and include a 20% reduction in members’ benefits.

In recent days, the dispute has seen claims exchanged in correspondence between the airline’s director of change, Seán Murphy, and Siptu’s pensions policy advisor, Dermot O’Loughlin.

In a letter sent to Mr Murphy on Monday, Mr O’Loughlin rejected claims by the airline that €110m to be placed in a new defined contribution scheme was “adequate”. He said €110m was insufficient because:

* It was always envisaged that all members would, as a minimum, receive a 100% coordinated pension entitlement, not a 20% reduction.

* As there was no revaluation within the trustees’ proposals, the union expected Aer Lingus to assume responsibility for that.

* The capital sum referred to by the airline was based on data from late 2012/early 2013 thus was out of date.

Yesterday in a response to Siptu sectoral organiser Greg Ennis, Mr Murphy addressed those three points. He said it was never envisaged that there would be a requirement for IASS to deliver 100% coordinated coverage. He said such a requirement did not feature in interim or final Labour Court recommendations.

He said a joint submission to the court by actuaries from Aer Lingus and the Irish Congress of Trade Unions “incorporated an assumption of 50% coordinated benefit to be provided by the freezing of IASS”.

On the second Siptu point, Mr Murphy said it was never envisaged that IASS would deliver any degree of revaluation of benefits within the scheme.

On the third claim that the €110m contribution was “out of date”, he said the airline’s actuary had undertaken an assessment of the adequacy of the figure based on “the latest available data”.