Both Aer Lingus and the Dublin Airport Authority are seeking urgent meetings with the trustees of their joint pension scheme after it emerged yesterday that regulators have rejected plans to tackle a €780 million shortfall in the retirement plan.
Staff in both State companies are members of the Irish Aviation Superannuation Scheme (IASS), whose shortfall has brought both to the brink of industrial action on a number of occasions.
In May, following six months of talks, the Labour Court recommended a deal involving payments from both companies totalling almost €200 million and freezing existing benefits.
However, it emerged yesterday that the Pensions Board has rejected the proposals on the grounds that they do not meet requirements laid down in legislation.
The two companies confirmed yesterday that they are “urgently” seeking meetings with the trustees to discuss the latest development. Both added that they were not in a position to comment any further.
Reports yesterday said that the board’s chief executive, Brendan Kennedy, highlighted that it understood from trustee presentations that it would take up to 70 years before the scheme met required funding standards, putting it outside the terms of the Pensions Act. However, Mr Kennedy said the board was broadly happy with other elements of the plan.
The Labour Court plan involved Aer Lingus paying €110 million in relation to active members of the scheme and €30 million for deferred members, that is those who have left but not reached retirement.
The DAA would pay €52.75 million for active members and an undisclosed sum in relation to the deferreds.
The benefits accrued up to this point would be frozen and covered through the purchase of long-term bonds. Staff would then move to a defined contribution scheme, freeing both companies of any future liabilities for retirement plan deficits.
The board’s reference 70 years relates to the fact that the scheme has to take ino account the probability that some active members now in their 20s could reach their 90s. They would still be entitled to payments from the scheme, although these would be small as they have not built up large benefits. This has led to some speculation that the board’s concerns could be addressed quickly.
It emerged last month the scheme’s trustees are understood to have been told that the amounts that they are offering to put up to plug the deficit are not enough and want to see extra payments for deferred members. The companies resisted this.
Trade union Siptu, which has members in both companies, said it was disappointed by the board's decision. Sector organiser, Dermot O'Loughlin, said: "Siptu representatives will be going back to our members to discuss what further action we will take to ensure that the pension rights of Aer Lingus workers are respected." He added that the board's decision was not the end of the process.
Fianna Fáil spokesperson on transport, tourism and sport, Timmy Dooley, called on Aer Lingus to come forward with “realistic funding proposals”.
The Pensions Board did not comment.