Aer Lingus says unions dropping support for pension fund proposals

Aer Lingus has accused trade unions of withdrawing their support for Labour Court proposals designed to resolve the €780 million shortfall in a pension fund the airline operates jointly with Dublin Airport Authority.

For the last six months, the companies, unions and the trustees of the scheme, the Irish Airlines Superannuation Scheme (IASS), have been debating Labour Court recommendations designed to end an ongoing dispute over the shortfall.

These involve freezing the IASS and putting the remaining assets into low-risk investments to preserve their value, while at the same time, opening a new fund using a €110 million contribution from Aer Lingus to cover existing staff, and €30 million for workers who have left but not reached retirement.

Assets
In a letter to the Irish Congress of Trade Unions (ICTU), Aer Lingus argues that workers' representatives have added two new requirements that were not included in the Labour Court's recommendations: that staff get all benefits accrued to date in the scheme; and that the assets be invested in a lower-risk portfolio than originally proposed.

“The introduction by the trade unions of these two new requirements is effectively equivalent to a withdrawal of support for the Labour Court recommendations relating to Aer Lingus,” the airline’s director of people and change, Michael Grealey, says.

The letter is a response to a number of issues raised by ICTU industrial officer Liam Berney. Following concerns raised by the trustees, the unions argue that the €110 million contribution required from Aer Lingus is no longer enough to cover the airline's reponsibilities and want it to address this.

They also argue that they understood that the Labour Court recommendations would deliver 100 per cent co-ordinated coverage, that is, that their members get all benefits that they have built up in the IASS.

Aer Lingus disputes that this was ever contemplated by the Labour Court and says that this request, along with the call for the lower risk portfolio, are simply designed to justify the request that the company increase its contribution.

ICTU also demanded that Aer Lingus immediately pay a salary increase recommended by the Labour Court. The company says that it will do this, and include back pay to September of this year, once agreement has been reached on the pensions issue and all aspects of that deal are implemented.

In a similar vein, the company says that it cannot comply with a request that it release the €110 million contribution until that agreement is reached, and the trustees freeze the IASS. Aer Lingus plans to seek shareholder approval before it makes the contribution.

Approval
Aer Lingus does say that it shares the unions' goal of shifting existing staff and employers' contributions from the IASS to a new defined contribution scheme. However, it adds that this can only be achieved following the approval and agreement of all parties involved. That would include a full vote of all members of the IASS, active, deferred and retired.

The dispute over the shortfall in the pension scheme has been running for a number of years. The matter went to the Labour Court in January following a threat of industrial action by staff 12 months ago.