Aviation pension row has potential to cause serious industrial relations problems

The dispute over the €760 million deficit in the pension scheme which covers staff in Aer Lingus and the Dublin Airport Authority (DAA) threatens serious industrial relations problems across much of the aviation sector during the summer holiday period.

Already a work stoppage at the country's main airports in the run-up to the busy St Patrick's weekend was only averted by an order of the High Court.

It remains to be seen if the latest attempt to deal with the issue – the report of a Government-appointed expert panel – will satisfy all parties and avoid disruption as the peak holiday period approaches.

The Irish Aviation Superannuation Scheme is extremely complex. First, it covers staff of a number of employers – including the former SR Technics as well as Aer Lingus and the DAA. Second, there are different categories of people covered – those still at work, those who have left but are not retired, known technically as the “deferred” – and pensioners. There are also several different unions representing staff.

There are about 4,900 pensioners covered by the scheme in addition to nearly 3,700 deferred and 2,570 active workers.

Minister for Transport Leo Varadkar told the Dáil last week that the €760 million deficit had arisen over the years as the companies and the members did not put enough into the scheme to match the benefits that were expected.

The solution to the problem has centred around freezing and de-risking the current Irish Airlines Superannuation Scheme and introducing new separate defined contribution schemes with agreed levels of contributions including the provision of large scale, once-off lumps by the two employers.

Solution

However, while the bones of the solution seem clear, the tricky part of the negotiations over the past four years revolved around how the cost of restructuring the pension arrangements would be divided.

The expert panel report recommended that both Aer Lingus and the DAA increase their capital injections from €110 million to €146.7 million and €50 million to €57.3 million respectively. It also urged that the companies put up a further, unspecified amount in respect of the deferred members who have left but have not yet drawn down their pension.

The key question is whether the recommendations will be accepted.