The trustees of the Aer Lingus/DAA pension scheme have warned that members could face even bigger benefit reductions if a draft proposal to restructure it is not approved.

The trustees have already warned that because of a deficit of over €700 million in the scheme, they intend to cut benefits for pensioners, as well as current and former employees who have not yet retired. 

SIPTU members at Aer Lingus, the Dublin Airport Authority and the Shannon Airport Authority have already balloted to take strike action over the issue - which could result in transport chaos next month.

It is understood that the draft funding proposal was issued to management at Aer Lingus and the DAA today. 

The trustees outline their plans to cut pensions for retired members in line with new legislation implemented in December. 

In addition, current and former (deferred) employees who have not yet retired will see their benefits accrued to date cut by 20%. 

However, the trustees say that if this 25 year proposal is not approved, the alternatives would be "not beneficial" for members. 

They warn that any other solution would inevitably result in the accrued benefits of active and deferred members being scaled back further. 

The funding proposal states that, in order to deliver the original anticipated benefits, an additional contribution rate of 20.8% would be required.

Future pension entitlements would be provided through separate Defined Contribution pension schemes. 

SIPTU has described the current trustee proposals for restructuring the Aer Lingus/DAA pension scheme as extremely disappointing.

In a letter to the DAA Group Head of Employee Relations John McCormack, SIPTU's Pensions Policy Advisor Dermot O'Loughlin says the €50 million lump sum contribution from the DAA is insufficient to compensate workers for the projected cut in benefits.

The Department of Transport, Tourism and Sport said that the trustees' proposal required discussion between unions, employers, trustees and the Pensions Board. 

A spokesman said this was obviously a very difficult situation because the scheme was underfunded and the DAA has massive debts of more than €600 million. 

He said the problems with the scheme are recognised and must be resolved - and that there is now an opportunity to bring what he called this challenging issue to a conclusion. 

Mr O'Loughlin has sent a similar letter to the Shannon Airport Authority whose workforce is also covered by the scheme. 

In a letter to Mr O'Loughlin, Aer Lingus Director of Change and Engagement Sean Murphy reiterated the airline's view that the threat of industrial action is unhelpful.

Unions affected by the IASS issue will meet tomorrow to discuss their next move. So far, SIPTU is the only union to have balloted for industrial action. 

A group representing deferred members - former employees who are not yet receiving pensions - has also voiced anger at being excluded from negotiations, and has not ruled out taking legal action to defend their pension entitlements.