Aer Lingus scaring staff into smaller pensions, says union
UNIONS at Aer Lingus have accused the company of attempting to frighten its staff into accepting a radical restructuring of their pension scheme.
The airline warned the workers they would end up with just 4pc of the pension benefits they had been expecting if the scheme -- which is deeply in the red -- were to be wound up now.
Workers at Aer Lingus are members of a defined benefit scheme that also includes workers from the Dublin Airport Authority (DAA). The plan is called the Irish Aviation Superannuation Scheme (IASS).
Defined benefit schemes in the private sector promise to pay out two-thirds of final salary for those with 40 years service.
But the IASS had a deficit of €748m at the end of May, according to a Aer Lingus.
Aer Lingus wants to freeze pay at the airline for four years in return for a one-off payment into the scheme. It also wants to freeze contributions to the defined benefit plan.
The airline said it strongly believes that the current funding position of the IASS is unsustainable and must now be addressed by the IASS trustees.
Yesterday, Siptu organiser Dermot O'Loughlin said union members were astounded at the "provocation and deliberate scaremongering" by Aer Lingus on the pensions dispute.
Mr O'Loughlin disputed the claim that members of the scheme, who are still working, would only end up with 4pc of their expected benefits if the scheme was wound up now.
Aer Lingus was relying on "flawed financial data to frighten its employees who are members of the IASS", he said.
"The company is silent on the fact that it has cash reserves in the region of €900m and has historically been one of the lowest contributors to its employee's pension schemes," the union said.
Unions have calculated in the past that Aer Lingus would have to contribute at least €200m, with the DAA paying €130m, to ensure that members receive the pension benefits they have expected from the IASS.
The unions say stringent pension regulations and the unwillingness of employers to increase contributions to the scheme could force its wind-up.
The DAA, Aer Lingus and unions are currently before the Labour Relations Commission in relation to the issue.
The scheme is closed off to new members.
Aer Lingus said it was proposing that current members would not have any money put aside into defined benefit scheme for them in future.
Instead, a new defined contribution (DC) scheme would be put in place.
Mr O'Loughlin of Siptu said there were currently 4,760 active members in the scheme, 5,300 deferred members and 5,000 pensioners.
At the moment the active contribute 5.1pc of their salary, with the airline matching this. He claimed this was one of the lowest contributions.
It is proposed that members would contribute 10pc of salary to the new DC scheme, with Aer Lingus putting in 8pc, with no funds going into the defined benefit plan.