Last week, Shane Ross wrote about my union and the pension situation at the Dublin Airport Authority and Aer Lingus. Here's why I think he was wrong.
Due to solvency issues, the trustees of the Irish Airlines Superannuation Scheme (IASS) decided, with the approval of the Pensions Regulator, to freeze the fund.
The trade unions involved, representing the employees of both companies, unsuccessfully opposed this, arguing instead that the scheme could have been rescued and maintained as the provider of pensions on an ongoing basis.
The effect of the decision to freeze the scheme resulted in a reduction of benefits for both 'active' and 'deferred' members equally, leaving them with 80pc of co-ordinated pensions without revaluation, in respect of past service.
The trade unions did meet with representatives of 'deferred members' of the scheme. However we were unable to represent them as we have no standing to do so. Nevertheless a senior official was appointed to liaise with them and has met them on a number of occasions.
Ultimately, capital sums were provided by Aer Lingus and the DAA for 'deferred' members, targeted to achieve the equivalent of 90pc of co-ordinated pensions (and 90pc of uncoordinated pensions for those who entered the employment after the age of 46 because they paid the higher contribution appropriate to uncoordination).
They do include a certain element of revaluation. These have been invested in new defined contribution (DC) schemes on their behalf.
The projected growth rates in these schemes are in accordance with the levels approved by the Society of Actuaries.
New DC schemes have been negotiated for the 'active' members in both employments in respect of future service.
In the case of Aer Lingus, the scheme is targeted to achieve the equivalent of co-ordinated pensions in accordance with a formula recommended by the Labour Court. The calculations include a capital sum in respect of the reflection of variable pay - such as shift pay etc - into the future. However, a pay stabilisation formula has been agreed to provide savings for the company, which some commentators have valued as being worth in the order of €45m to €80m.
In the case of the DAA, the proposed DC scheme (which is currently the subject of a ballot vote) is targeted to deliver co-ordinated pensions (with a provision for up to 65pc of uncoordination for lower paid workers).
'Active' members will have to pay a substantially higher level of contribution than that which applied in the original IASS scheme. Neither of the schemes which have been negotiated in respect of 'active' members are targeted to deliver uncoordinated pensions. That being said, it is most unlikely that neither deferred members or active members retiring within the next 15 to 20 years will purchase annuities to provide for this element of their pensions.
They will most likely opt to set up Approved Retirement Funds (ARFs) instead, which will deliver considerably better value.
Jack O'Connor is general president of SIPTU
Sunday Indo Business