Upgrade in Aer Lingus fund urged

The joint pension fund at Aer Lingus and Aer Rianta has a surplus of more than £320 million, but a taskforce report on the scheme suggests that an additional £203 million could be required to improve its provisions.

The report, which is being examined by actuaries at both companies and by the Minister for Public Enterprise, Ms O'Rourke, airs grievances by workers and pensioners who have claimed that the scheme is out of line with best practice in other State and semi-State funds.

The scheme is likely to be split pending the planned flotation of Aer Lingus, although it is not clear who will fund improvements in pensions at the two companies. The scheme was previously split when FLS Aerospace acquired TEAM Aer Lingus in 1998 and provisions to establish a new fund were contained in a Bill to privatise the airline published this week.

Submissions to the taskforce chaired by Mr Sean Healy "highlighted the effects of underfunding, equalisation and the perceived lack of any improvement in the scheme since 1970".

Equalisation refers to the fact that contributions by both companies to the scheme equal those of workers, which is unusual. "All the submissions suggested that many of the perceived deficiencies of the scheme are directly related to the low level of employer contribution," said the report, which has been seen by The Irish Times.

An actuarial study of the scheme written by Mr Paul Kelly of Watson Wyatt estimates its value at around £990 million, while liabilities amount to £667 million.