Aer Lingus must spend more to plug pension gap, says panel

An expert panel set up to resolve the Aer Lingus pension dispute says the airline will have to spend more money to plug the fund's €780m deficit.

The capital sum recommended in respect of Aer Lingus is an all-inclusive €146.7m.

The sum recommended for the DAA is an all-inclusive €57.3m.

The panel was established by the Government in March when the first strike threat emerged at the airline and the country's main airports.

The report also recommends that benefits for workers at Aer Lingus and the DAA are reduced.

Transport Minister Leo Varadkar has read the report and has appealed for both sides to consider its findings.

"Essentially what they've put together is a set of proposals which can solve this long-standing problem once and for all," he said.

"It does require more money from the companies and it does require reductions in benefits for the members. Any solution is going to have to be in that space and I really would ask the companies, their boards, and the unions to give the … report careful consideration."

The Panel has recommended some alterations to the Labour Court Recommendations to reflect:

Aer Lingus

1. Lower contributions by lower paid active members;

2. A once-off employer pension contribution to take account of some elements of pay which are currently non pensionable;

3. An increase in Stabilisation Payments to €2,000 pa in 2015 and 2016 on a pensionable basis;

4. An amendment to certain technical assumptions.


1. Lower contributions by lower paid active members;

2. The proposed capital sum has the potential to provide 65% of the difference between the coordinated and uncoordinated pension in each case;

3. There is the potential to achieve a minimum of the accrued co-ordinated IASS pension;

4. There is provision for revaluation of 1.5% following an initial five-year freeze period recommended by the Labour Court.

Deferred Members

The Panel recommends that the Principal Employers should amend the manner in which funding for their former staff who are deferred members of the IASS is to be made available to alleviate as much of the impact of the Trustee proposal as is possible whilst also recognising the overall affordability to the Principal Employers of the proposals for active and deferred members.

The Panel is recommending that the IASS Trustee would meet with the employers to agree how this might be achieved for deferred members.

This discussion should be informed by a set of principles which the Panel has discussed and agreed with the employers and communicated to the Trustee such that the integrity of the Trustee proposal of 14 February 2014 can be maintained.

Pensioner Members of the IASS

The Panel met with representatives of pensioner members as represented by the ‘Retired Aviation Staff Association’ to hear their concerns.

The Panel explained to them that its process is an industrial relations process, consistent with our terms of reference and that the responsibility for dealing with the pensioner members of the scheme still rests with the IASS Trustee.

The Panel’s recommendations for active members:

* Recognise that the employers regard the IASS as being incapable of being sustained and will not contemplate, in any circumstances, investing any additional funding to address the very significant IASS deficit of liabilities over assets as calculated under the statutory minimum funding standard.

* Accept fully that, as a consequence, a final solution must urgently be framed around acceptance of the freeze and de-risk of the IASS and the introduction of new separate DC Schemes in each case with agreed contribution levels and once off capital contributions into those schemes.

* Acknowledge the need to mitigate the loss on the retirement income of employees and in particular those on lower pay.

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