Trustees raise possibility of Aer Lingus/DAA pension fund being wound up
Cuts in benefits likely even after €200 millioninvestment by companies
The trustees of the joint pension scheme for staff in Aer Lingus and the Dublin Airport Authority (DAA) have warned that if a solution to its funding deficit is not found soon they may have to take unilateral action which would almost certainly involve reducing benefits for members.
The trustees told members of the scheme in a letter delivered on Wednesday that in such a scenario they would not be able to take account of a proposed investment of about €200 million by the companies aimed at plugging the financial deficit.
The letter also raised the possibility of the Pensions Board ordering the winding up of the scheme, which has a deficit of more than €700 million.
In the letter sent to members of the Irish Airlines (General Employee) Superannuation Scheme, the chairman of the trustees Brian Duncan said that June 30th was the deadline for the scheme to submit a funding proposal to the Pensions Board designed to meet the statutory minimum funding standard set down in legislation. He said it was unlikely that this deadline would be extended.
Following about two years of talks between unions and management at Aer Lingus and the DAA, the Labour Court last month issued a recommendation for dealing with the pension deficit which involved new investment by the companies.
However, in his letter Mr Duncan said that even following the changes recommended by the Labour Court “further reductions in the benefits of active and retired members would very likely be needed to put the scheme on a sustainable footing”.
He said that any solution to the problem of the deficit in the scheme would need to be approved by the Pensions Board.
“Ultimately, if the trustee cannot find a solution to the funding issues facing the scheme, the trustee may have to take unilateral action (or indeed the Pensions Board may direct them to take action) to address the deficit which would almost certainly have to include a reduction in the benefits of active and deferred members without being able to take account of any additional funds that may be made available by the employers.”