Posted by Old Boy
Unions at Aer Lingus and the Dublin Airport Authority say the two companies will have to contribute at least €330m between them to resolve the row over the €750m deficit in their joint pension scheme.
Management and unions at the two aviation companies have been locked in complex negotiations to address the deficit at the scheme known as the Irish Aviation Superannuation Scheme (IASS).
Last week, SIPTU withdrew strike notice to allow negotiations to continue.
The latest figures are contained in a submission sent by Irish Congress of Trade Unions Industrial Officer Liam Berney to the talks chairman, Labour Relations Commission Chief Executive Kieran Mulvey.
Unions calculate that Aer Lingus would have to contribute at least €200m, with the DAA paying €130m, to ensure that members receive the pension benefits they have expected from the IASS.
The unions say that stringent pension regulations and the unwillingness of employers to increase contributions to the existing scheme could force its wind-up.
The DAA said it was currently in a process at the Labour Relations Commission in relation to the pension issue.
It said that based on actuarial advice, the DAA offer would deliver a substantial pension for DAA staff at retirement.
It described SIPTU’s earlier description of the DAA’s offer as “derisory” as a misrepresentation of the facts.
Aer Lingus said it remained committed to finding an appropriate solution to the issues involving the pension scheme.
Aer Lingus and the DAA have proposed freezing the current defined benefit scheme, and using the assets to buy sovereign bonds to fund benefits.
In future staff from the two companies would belong to two separate defined contribution schemes – which carry more risk for the employee.
The document notes that settling the dispute over the pension deficit will bring considerable benefits to the employers, by transferring risk from the employers to the employees, by improving the balance sheets of both companies, and by enhancing the Aer Lingus share price.
However, it also warns that employees stood to lose a considerable portion of their expected benefits.
Informed sources noted that legal action could not be ruled out, either by shareholders in Aer Lingus objecting to further payments to pension funds, or from deferred members or retired members of the scheme, who are not represented at the negotiations.
It also remains to be seen what position will be adopted by the trustees of the IASS, who have ultimate legal and financial responsibility for the scheme.