AerLingus Pension and legal action

[elacsaplau]

Thanks Liam

My query is as you have said – are you able to shed any light on the regulatory / legislative basis which provides for such an approach please? I may not be alone in my confusion. I did a bit of digging this evening. In the notes to the financial statements of Aer Lingus’ annual report for the year ended 2010, it states:

29 Pensions and other post employment benefits

The Group operates a number of externally funded pension schemes for the majority of its employees. The Irish Pension Schemes meet the definition of defined benefit schemes under the terms of the Pensions Act 1990. One of the Irish Pension Schemes, the Irish Airline (General Employees) Superannuation Scheme (the “Main Scheme”) is operated in conjunction with a number of other employers.

However, in the following year’s report, the note regarding pension plans had become……

25 Defined contribution pension schemes

Aer Lingus participates in a number of pension schemes for its staff. The principal schemes, and the Group’s contributions to them, are set out in the table below. These are accounted for as defined contribution schemes because the rate of contribution to the schemes is fixed.

So did something happen during 2011? Was the plan re-registered with the Pensions Board during 2011? Were employees told that they were no longer in plans which met the definition of defined benefit schemes? Are these plans still registered with the Pensions Board as DB plans but described as DC plans in the company’s annual report? etc., etc.

 

[LDFerguson]

I've no insights into this scheme, other than what I read in the media, but it seems to be a strange cross between a DB and a DC scheme.

From [broken link removed]

The great majority of Aer Lingus staff (other than pilots) are members of the Irish Airlines Superannuation Scheme (“IASS”). This pension scheme is unusual for a number of reasons.

Firstly, it is a multi-employer scheme, with the principal other employers being the Dublin Airport Authority (“DAA”) and Shannon Airport Authority (“SAA”).

Secondly, the contribution rate is fixed and cannot be changed without the agreement of employer and employee. For this reason, from the employer’s perspective, it is a defined contribution scheme. However, under the trust deed and rules, the pension scheme targets benefits linked to final salary and length of service. The funding rate and investment performance is inadequate to support these target benefits and, as a result, a substantial deficit has arisen in the scheme. On 31 December 2013, this deficit was estimated by the scheme actuary to be some €715 million on the minimum funding standard basis. Mathematically, approximately 65% of the schemes liabilities are associated with current or former members of Aer Lingus staff.