NTMA part of Aer Lingus pension proposals

Proposals have been drawn up to plug the €722m deficit in the Aer Lingus pension fund by giving its assets to the National Treasury Management Agency in return for a long-term bond portfolio.

The pension deficit is viewed as a major obstacle to the Government's plans to sell off its 25% stake in the airline as part of the troika programme for the sale of State assets.

Dealing with the massive deficit is further complicated by the fact that the Irish Aviation Superannuation Scheme is a multi-employer scheme, which covers the private sector Aer Lingus, the state-owned Dublin Airport and the defunct SR Technics.

Proposals floated at the Labour Relations Commission would start by freezing the scheme so no further contributions are made and no benefits build up.

Its assets worth €1.4bn would transfer to the NTMA. In return, a bond portfolio would be issued, including some bonds maturing over decades.

However, there are a number of problems.

It is unclear what share of the liabilities each employer will have to cover, given their financial situations vary and SRT is defunct.

There are questions over who will pay for the shortfall if the NTMA bonds do not yield enough to meet pension obligations.

In addition, brand new separate DAA and Aer Lingus pension schemes must be negotiated for future pensions.

Sources say it is likely that future pensions for Aer Lingus and DAA workers will be lower.

Employers and trustees are seeking that the State pension be integrated with the aviation pension to reduce the burden on the superannuation scheme. This would apply to future retirees.

It remains to be seen whether the NTMA mechanism will be used to deal with pension deficits in other State companies.

Government sources stressed that it was vital there was no additional burden for the taxpayer.

• Keywords:  
• aer lingus,
• ntma,
• dublin airport authority,
• sr technics,
• lrc