Aer Lingus staff face pension cuts of 25%
Proposals put to airline and DAA by trustees of their joint retirement plan
Aer Lingus is due to pay a total of €140 million to a new, defined contribution scheme
Staff at Aer Lingus and Dublin Airport Authority (DAA) are facing cuts of 25 per cent in their pension benefits under proposals put to both companies this week by the trustees of their joint retirement plan.
The move has angered trade unions, whose representatives are set to demand that the companies make whatever contributions are necessary to ensure that their members’ retirement benefits remain intact.
However, Aer Lingus and the State-owned DAA are likely to resist this request, as an existing Labour Court proposal aimed at resolving the long-running row over a shortfall in the Irish Aviation Superannuation Scheme (IASS) requires them to make lump sum payments totalling €200 million.
In a series of confidential briefings with management and unions at both companies over the past two days, the scheme’s trustees said that a number of benefit cuts were required to satisfy concerns raised by the Pensions Board about the Labour Court proposal.
The trustees proposed that members take a cut in benefits of 25 per cent, or they proposed a combination of measures that involved beneficiaries taking a lump sum on retirement and a 12 per cent reduction on their pension payout.
They also proposed increasing the retirement age to 68, in line with the changes to State pension entitlements.
The presentation given by the trustees also states that the Pensions Board is prepared to wind up the scheme if a satisfactory solution to its funding problem cannot be found.
They warn that if this were to happen, there would be a “very substantial reduction in accrued benefits” to both existing staff at both companies and those who have left but have yet to retire.
The latest twist in the three-year-old row over the €780 million shortfall in the IASS seems almost certain to lead to further threats of industrial action from unions representing staff in both companies.
The issue brought staff at the two firms close to strike late last year, which was only prevented by the Labour Court’s intervention.
While none of the parties involved would comment, neither company is likely to agree to make further contributions to the scheme over and above what was put forward in last May’s Labour Court proposal.
Under the terms put forward by the court, accrued benefits in the IASS would be frozen and covered by the purchase of sovereign bonds.
This would free both companies of any further obligations under the plan.
At the same time, Aer Lingus is due to pay a total of €140 million to a new, defined contribution scheme, €100 million for existing staff and €30 million to cover deferred members of the IASS.
Under the same proposals, the DAA’s contribution is understood to be about €60 million in respect of both current and deferred members.