New proposal to cut pensions at Aer Lingus, DAA, SAA over joint pension scheme deficitSaturday 15 February 2014 11.42
Workers and pensioners at Aer Lingus, the Dublin Airport Authority and the Shannon Airport Authority are set to have their pensions cut under a new proposal to resolve the deficit in their joint pension scheme.
Staff at all three companies have voted to take strike action in protest at the failure to resolve the row over a deficit of around €780 million in the pension scheme.
A previous trustees' funding proposal to address the deficit was rejected by the Pensions Board.
Chairman of the Trustees Brian Duncan wrote on behalf of the trustees to management and unions at Aer Lingus, the DAA and the Shannon Airport Authority.
The trustees state that for the first time they plan to cut pensions in payment to current pensioners "to the maximum permitted by recent legislative changes".
Previously, where schemes get into difficulty, the entitlements of those who had already retired could not be reduced, potentially leaving current and deferred members with nothing.
This will be the first application of this legislation to a pension scheme in deficit.
The trustees also envisage a 20% cut in the accrued benefits for current employees and former employees who are not yet claiming a pension.
In the letter, the trustees say that at this point, they do not intend to increase the pension age under the scheme.
However, they warn that this and other changes could be necessary if the funding proposal goes "off-track" in the future.
The trustees have formally requested employers and unions who plan to hold further discussions to give appropriate consideration to the position of deferred members - former staff who have not yet retired.
Deferred members have not been represented at the negotiations on the pension scheme restructuring.
The letter tells the parties that they are targeting a completion date of 31 December this year to implement the changes.
The DAA confirmed that it had received the trustees' proposal.
It said that it remains disappointed that the outcome of this process will result in cuts of 20% in accrued pension benefits.
However, it acknowledges that confirmation of the proposal after a long period of uncertainty can facilitate progress towards achieving a fair and balanced resolution of what it described as "this complex issue".
The DAA said it would review the details of the proposal and engage with all stakeholders.
Aer Lingus has declined to comment.