Aer Lingus backs court ruling on pension fund payment
IRELAND – The Aer Lingus board has backed a Labour Court recommendation to solve major pension scheme funding problems to stave off cost uncertainty and the threat of strikes.
The board said the airline would pay €140m into the new fund along with other payments.
The Irish Labour Court issued recommendations last week, outlining payments the company should make if it is to go ahead with its plan to replace the existing, underfunded Irish Airlines Superannuation Scheme (IASS) with a new defined contribution (DC) pension fund.
Aer Lingus chairman Colm Barrington said: “The recommendation is clearly a compromise that contains elements that are challenging for all parties.
“Notwithstanding these challenges, it is our assessment the recommendation is a step forward that balances the various risks and concerns, and for this reason it should form the basis upon which the parties proceed.”
He said the board hoped the next steps would happen quickly so full details of the proposed solution could be put to Aer Lingus’s shareholders.
The recommendation involves Aer Lingus making a one-off contribution of €110m to a new defined contribution scheme for existing employees and cost stabilisation payments up to 2017 replacing existing annual increments.
The board said that, as in its original submission to the Labour Court in December, it would also make a €30m one-off payment to the new scheme in respect of deferred members of the scheme.
It said the solution would significantly improve the current and future pension prospects of employees in the scheme, so contributing to a positive working environment, which was in the interests of all stakeholders.
Apart from this, it would give the company cost predictability up to 2017, a basis for industrial relations stability as well as addressing risks of industrial action and litigation, it said.
The compromise is meant to deal with a funding gap in the pension scheme of €750m according to the most recent figures.
The board noted that the Irish Airlines (Pilots) Superannuation Scheme was not part of the court recommendation, saying the company was involved in separate discussions over the funding shortfall in that scheme.
Implementation of the planned solution depended on “a series of further complex steps”, the board said.
Various parties including the Irish Congress of Trade Unions, the trustee of the IASS and Aer Lingus shareholders will have to approve the proposal, it said.