Thursday 22 February 2018

Airport workers see sharp fall in pension values

Pension solvency levels show deterioration over course of the last 18 months

Transfer values are currently reduced due to the insolvency of the scheme,
Transfer values are currently reduced due to the insolvency of the scheme," said the documents seen by this newspaper. (stock image)

Fearghal O'Connor

Solvency levels in the frozen €1.8bn airport pension fund have fallen dramatically over the past 18 months, according to documents seen by the Sunday Independent.

Individual members of the pension scheme have sought transfer values for their own personal fund and these values have fallen steadily in recent months.

Transfer values calculated at the end of May 2016 suggested a solvency level of 95pc in the Irish Airlines Superannuation Scheme. By August of this year, however, solvency levels had fallen to 77pc, the documents show.

The impact of the falling solvency level is that members who choose to withdraw their funds from the scheme must currently take a haircut of as much as 23pc on their pension pot.

"Transfer values are currently reduced due to the insolvency of the scheme," said the documents seen by this newspaper.

One individual who enquired about the transfer value of their pension in June of this year was told that the full transfer value was over €360,000 - but that after an 11pc solvency reduction was included the actual transfer value at that time was just over €320,000, or 89pc of their fund.

By the time the individual received a second updated transfer value at the end of August, the full transfer value had risen to over €370,000.

But the solvency reduction had jumped to over €80,000, or 23pc, and the actual transfer value of the person's fund had fallen to under €290,000.

Transfer values for other scheme members, also seen by this newspaper, also confirm a downward trend. Transfer values only impact fund members if they look to move their pension pot out of the fund and therefore will not impact upon pensions currently in payment.

The airport pension, a defined-benefit scheme for workers at Aer Lingus, DAA and Shannon Airport, was the subject of a protracted industrial relations battle that saw the scheme frozen in 2015.

New defined-contribution schemes were established for staff, while pensioners are paid from the frozen scheme. The assets of the scheme were transferred into less risky low-yielding assets.

The fund had over €1.8bn in net assets as of the last financial results issued for it for the year to the end of March 2016, down €120m from the previous year.

Membership of the scheme had dropped slightly to just over 14,000, consisting of almost 5,000 pensioners and over 9,000 deferred pensioners.

Meanwhile, Aer Lingus workers have backed a pay deal at the company by a narrow margin.

Over a thousand Siptu members in Aer Lingus voted by 53pc to 47pc to accept a Labour Court recommendation aimed at resolving the pay dispute at the airline in a ballot counted on Friday.

The Labour Court had recommended that Aer Lingus staff should be given a total pay rise of 8.75pc over 39 months, well below the 19.1pc and profit share demanded by trade unions.

Sunday Indo Business

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