Aer Lingus should pay a capital sum of €146.7 million ($199 million) to help resolve problems arising from a shortfall in the Irish Airlines Superannuation Scheme (IASS) pension pot, an expert panel has recommended.
Dublin Airport Authority, which manages Cork’s airport as well as the Irish capital’s, should pay €57.3 million, says the panel, which was set up by the Irish government in partnership with employer association Ibec and trade union body Congress. Both amounts are described as “all inclusive” by the panel.
The airline and airports operator have long been at loggerheads with unions and pension trustees on how a scheme deficit of some €780 million should be dealt with.
Aer Lingus notes in response to the new recommendations that the contribution the panel proposes it makes is “higher than the €110 million contribution previously recommended by the Labour Court in 2013”.The panel has also suggested other changes to those Labour Court recommendations. For both Aer Lingus and DAA, it proposes lower contributions by lower-paid active members. The airline, it adds, should make a one-off employer pension contribution to take account of some currently non-pensionable elements of pay, increase “stabilisation payments” to €2,000 per annum in 2015 and 2016 “on a pensionable basis”, and amend certain technical assumptions.
The panel says the capital sum proposed for DAA has “the potential to provide 65% of the difference between the coordinated and uncoordinated pension in each case”, and that “there is the potential to achieve a minimum of the accrued co-ordinated IASS pension”. It has provided for “revaluation of 1.5% following an initial five-year freeze period recommended by the Labour Court”.
As regards deferred members, the panel is recommending that the IASS Trustee should meet with the employers for talks. It meanwhile stresses that “responsibility for dealing with the pensioner members of the scheme still rests with the IASS Trustee”. Aer Lingus has proposed a contribution of €30 million in respect of deferred employees.
In recognition of the employers’ position that the IASS is “incapable of being sustained”, the panel acknowledges that a solution must “free and de-risk” the scheme while introducing new direct-contribution arrangements.
The body requests that its proposals be put by the parties to their respective constituents “without delay” and “with a recommendation for acceptance”.
Aer Lingus says it intends to “review the report and the recommendations made by the expert panel”. The DAA uses similar language, saying it will “review the Report in detail and revert to the expert panel as appropriate”.