Aer Lingus has advised its unions it intends establishing a separate pension fund for staff. At present they are covered by the £1 billion (€1.26 billion) Irish Airline (General Employees) Superannuation Scheme which also covers Aer Rianta and FLS Aerospace (formerly Team Aer Lingus).
The new legislation preparing for the flotation of Aer Lingus allows for a separate pension fund, but it is not mandatory. However the company's unions have been pressing since last January for a stand-alone scheme claiming it is essential.
As Aer Lingus employees comprise about 75 per cent of the 8,000 people covered by the existing scheme, the bulk of the £1 billion is expected to go to the new fund in any actuarially-based carve-up. The separate pension fund for the airline's 450 pilots is not affected by the changes.
SIPTU, which represents the majority of staff at the airline, has welcomed the company's decision. Aer Lingus branch secretary Mr Tony Walsh said the move was in line with the submission SIPTU made to the taskforce established last January by the Minister for Public Enterprise, Ms O'Rourke, to hear concerns of employees on the pension scheme.
"The new arrangement will allow Aer Lingus and its employees to control their own fund and the benefits package to be provided into the future." He added that staff contribute 6.375 per cent of salary to their pensions. This provides 50 per cent of total pension funding, which is high.
"It is a building block for the future in relation to pensions arrangements," Mr Walsh said. "There will always be a need for improvements in the scheme and we see today's development as vitally important in that context."
IMPACT deputy general secretary Mr Shay Cody said that a key priority would be ensuring the new scheme provided for indexation. At present indexation is at the discretion of pension fund trustees.
Mr Cody said that pilots needed to retain their own scheme because of their special requirements. They undergo six-monthly health checks and normally retired between 55 and 60.
Meanwhile, the Irish Congress of Trade Unions held another hearing yesterday into the dispute between IMPACT and SIPTU over the transfer of more than 1,300 cabin crew from the latter to the former union. A preliminary report is expected this month. The dispute is expected to be resolved relatively quickly. If it is not, the fact that there is an interunion row over who should represent a key group within the workforce would have to be included in the flotation prospectus. This is unlikely to enhance the attractiveness of an IPO.
