Aer Lingus and DAA should boost pension fund

The panel that examined the €780m deficit in the aviation pension scheme yesterday said the solution it was suggesting provides the "final opportunity" for members to get their "optimum level of future pension provision".

The expert panel, appointed by the Government, Ibec, and the Irish Congress of Trade Unions to review issues with the Irish Aviation Superannuation scheme (IASS), recommended that Aer Lingus pay €146.7m towards the pensions of its current staff — €36.7m more than recommended by the Labour Court in 2013.

The Dublin Airport Authority was told it should pay €57.3m — €7m more than the court proposed.

Furthermore, it said lower paid employees should be expected to make lower contributions to the scheme. It said the trustees of IASS should meet with company representatives to discuss funding arrangements for the significant number of “deferred” workers — those who had been employed by the airline but left and are now working elsewhere.

“It is the panel’s view that if this final opportunity to resolve this very protracted and divisive dispute is not grasped now, the situation facing members of the IASS will deteriorate further and that any current expectation of any optimum level of future pension provision will not be realised,” the panel said in its report.

It said that if this ‘final’ initiative fails, the IASS trustee would press ahead with an application to the Pensions Authority which would involve “freezing the IASS for future service, no future accrual, no future revaluation, removal of non- coordination and a 20% cut in accrued benefits”.

Aer Lingus CEO Christoph Müller warned it would be very difficult to persuade shareholders to sign off on additional capital funding in the absence of “quid pro quos” in terms of workplace savings.

“In addition, the expert panel is recommending a further, non-quantified amount, to be determined by a set of principles in respect of former Aer Lingus employees who have yet to reach retirement age (the ‘deferreds’),” it said. “This contribution would be in addition to the €30m previously proposed by Aer Lingus in respect of deferreds.”

Cabin crew union Impact will hold information meetings for members. Dermot O’Loughlin, pensions policy advisor with Siptu which represents ground crew, said the report required detailed consideration.