Aer Lingus has received backing from shareholders to inject €150m into a new defined contribution (DC) fund, signalling an end to a protracted dispute over the €715m deficit in the Irish Airlines Superannuation Scheme (IASS).
The airline, which convened this week’s extraordinary general meeting to approve the recommendations of a government-backed expert panel, saw an overwhelming majority of shareholders approve the deal.
In June, the expert panel said IASS sponsors – Aer Lingus and the Dublin Airport Authority – should put aside more than €200m to address the needs of active members who would suffer benefits cuts if the defined benefit fund wound up.
If the scheme were to wind up under the current priority order, which no longer grants pensions in payment absolute priority, the fund’s deficit would fall to €197m.
The airline has agreed to inject €147m into a new DC arrangement for IASS members, as it is barred from making deficit reduction payments to the fund.
In its third-quarter results, Aer Lingus noted that once shareholders had signed off on the deal, the Pensions Authority would need to approve the Section 50 benefits cuts put forward in the IASS funding proposal.
It is unclear if the Authority will approve the Section 50 request before the end of the year, as the airline had hoped the restructuring would be complete by 1 January 2015.
Aer Lingus could not be reached for comment.