Aer Lingus Opens Talks With Unions Over Pension Proposals
11 October 2012 (PLANSPONSOREurope.com) – Aer Lingus has opened talks today with unions over the closure of the Irish Airlines Superannuation Scheme (IASS) and the launch of a new defined contribution (DC) plan.
This week the airline released a statement in which it explained the funding shortfall of the IASS, which covers some Aer Lingus’s past and present workers as well as Dublin Airport Authority staff, as of 31 May 2012 was roughly €748m on the current statutory Minimum Funding Standard basis.
According to Aer Lingus, as Irish pension legislation takes priority over IASS assets for pensions in payment, had the IASS been wound up on 31 May 2012, current employees and their beneficiaries not yet in receipt of a pension would have received just 4% of their expected IASS pension benefits.
Consequently Aer Lingus has proposed the IASS should be closed to new members, while benefit accrual for current members should cease.
The IASS investment policy would also be changed by the Trustees to reduce risk by investing in bonds whose cash flows broadly match IASS obligations.
Meanwhile Aer Lingus would establish new DC arrangements on “competitive” terms in respect of future service of its own employees.
An Aer Lingus spokesperson told PLANSPONSOR Europe the airline is proposing to increase contributions by 0.9%.
“The current levels of contributions to the IASS scheme and the supplementary scheme are about 9.1%,” he added.
“The proposal is in terms of DC is to increase that to 10%.”
According to the spokesperson current members of the airline’s present DC pension plans would also see contribution levels increase from around 8-9% to 10%.