IRELAND - An estimated 40% fall in the value of its top equity holdings has caused the funding level of the Irish Airlines (General Employees) Superannuation Scheme (IASS) to move from a €79m surplus to a €628m deficit, a trade union has claimed.
Analysis of the market value of 14 of the pension fund's top 20 equity holdings by the Services, Industrial, Professional and Technical Union (SIPTU) in March suggested there had been a fall in investment and property holdings of between 45-55%.
The reports showed at the last actuarial valuation of the fund in March 2008 there were assets of €1.767bn and a surplus of €79m, but SIPTU pointed out in the last year there has been a "very significant devaluation in the market value of the scheme's funds".
A "broad snapshot" of the position of stocks showed the worst performers between March 2008 and last month were bank holdings, with Anglo Irish Bank reporting a 100% fall, Allied Irish Banks a 96% drop and Bank of Ireland Group a 95% fall, following the collapse and emergency recapitalisation of the Irish banking sector.
The only company of the 14 analysed by the union that actually produced a positive performance over the year was Ryanair - a rival to Aer Lingus which is one of the main employer sponsors of the IASS - which saw its market value increase by 5%.
However, the report said it adopted an average devaluation of 40% to calculate the current funding position of the scheme, reducing its asset value from €1.767bn to €1.06bn, and even if the liabilities remain at the same level as the 2008 valuation of €1.688bn this produces a new deficit of €628m - excluding any future increases.
SIPTU claimed if these calculations are correct the IASS fails the statutory minimum funding requirement, and would therefore need to submit a recovery plan to the Pensions Board detailing how it will restore the funding level by the next valuation.
The union argued that an "excess of liabilities over assets of over €628m is an extremely challenging vista that must be addressed immediately", and said the two primary employers of the IASS - Aer Lingus and the Dublin Airport Authority (DAA) - have "substantial net cash balances in the region of €1.375bn", which could be used to reduce the deficit.
SIPTU warned: "It is incumbent on the trustees of the scheme, in concert with Aer Lingus and the DAA, to prioritise the establishment of recovery proposals to re-establish the positive wellbeing of the IASS. If the primary parties, associated with the scheme, fail to act on these considerations it will be seen as an abandonment of corporate social responsibility and reasonable managerial ethics."
Aer Lingus and the DAA were unavailable for comment on the situation at the time of publication.
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