Pensions Board rejects plan to plug €750m hole in Aer Lingus scheme
PLANS to plug a massive €750m deficit at a pension scheme that serves thousands of former and current workers at Aer Lingus and the Dublin Airport Authority were plunged into disarray last night.
The two companies have spent years trying to thrash out a solution with unions to address the deficit.
Although both Aer Lingus and the DAA insisted they had no legal obligation to inject any more funds into the defined benefit scheme – the Irish Airlines Superannuation Scheme (IASS) – the pair had eventually agreed to inject €200m to solve the issue.
But now the head of the Pensions Board – chief executive Brendan Kennedy – has told the trustees of the IASS that the outline proposals put forward aren't acceptable.
In a letter to the trustees seen by the Irish Independent, Mr Kennedy says the planned proposals would not achieve a satisfactory outcome and would "not be an acceptable basis for a funding proposal".
"We understand from your presentations that it would be up to 70 years before the scheme would meet the funding standard, and it is our view that such a lengthy derogation from the obligation to meet the funding standard would not be consistent with the objectives of the Pensions Act," he told the trustees, whose chairman is Brian Duncan.
A spokesman for the Pensions Board said it does not comment on individual schemes. However, it is hoped the board's issue is technical rather than fundamental.
Agreement had been reached with unions, following protracted talks at the Labour Court, to freeze the IASS. Its assets would then be sold and bonds purchased to generate funds to meet pension entitlements accrued as of the freeze date.
Aer Lingus had then planned to pay €140m into a new defined contribution scheme, while the DAA would provide around €65m for a new defined contribution scheme for its staff. Many employees would see their future pension entitlements reduced and Aer Lingus also sought improved productivity measures.
The proposals were to be put to union members for a ballot in the autumn.
Aer Lingus management is likely to seek a meeting with the scheme's trustees this week, while the DAA is also continuing to work with the trustees.