The High Court has rejected a challenge on behalf of some 600 retired Aer Lingus and DAA workers over cuts to their pension scheme.
Ms Justice Teresa Pilkington found there was no breach of the pensioners' constitutional property rights as the reductions to their pensions arose and were enacted under amendments to the Pension Act, not to the Air Navigation and Transport Act 1988, as they had claimed.
They had sought declarations including that section 32B of that 1988 Act, as amended by the Shannon Airports (Shannon Group) Act 2014, was invalid under the Constitution.
The defendants, Ireland and the Attorney General, denied the claims.
In cases by four individuals regarded as test cases for the others, it was claimed the State used that law to cut pensions to help address a €770 million pension fund deficit and avoid industrial unrest among existing workers before the sell off of Aer Lingus in 2014/15.
The circumstances of those still at work – active and deferred members of the Irish Airlines Superannuation Scheme (IASS) – "was improved by disimproving the lot of existing pensioners" under the 2014 restructuring of the defined benefit scheme, it was claimed.
The State decided to solve a problem of the €770 million deficit before Aer Lingus was sold to the International Airlines Group (IAG) by imposing the deficit on the existing pensioners because "they weren't going to go on strike", it was also claimed.
Pension deficit
In a judgment on Thursday, Ms Justice Pilkington said the IASS pension deficit was clearly a significant problem.
From the outset, the evidence was both Aer Lingus and the DAA made it clear that they were not going to make any payments into the IASS scheme and any payments would be made to a new scheme, a contributory one, for the actives and the deferreds, the judge said.
That proposal met with the approval of the unions and was recommended by the IASS trustees.
The judge said that position may be criticised by the plaintiff pensioners and noted one of them had, in evidence, pointed to Aer Lingus’s more paternalistic attitude to the IASS in previous years.
However, it was not for the court to suggest or consider what alternatives might have occurred had different options been exercised, she said.
What she had to consider was whether there had been an infringement of the pensioners’ constitutional rights within the events that occurred and the decisions actually taken.
The difficulty for the court was in considering the Air Navigation and Transport Act 1988 as “targeted legislation.”
She said the overall parameters of what was eventually accepted as a resolution of this issue were arrived at relatively early within the process and emerged in the industrial relations arena.
Economic difficulties
The defendants’ witnesses, in their evidence, did not have as their starting point the intent to effect the changes to the pension scheme which ultimately occurred but rather in seeing a huge pension deficit in the context of ongoing serious economic difficulties, she said.
The judge accepted the Government wished to see this issue resolved and the agreement for the sale of certain State assets was part of its agreement with the troika. She also accepted the government feared ongoing industrial issues.
She did not discern “any evidence that what emerged was in any sense targeted at the plaintiff pensioners or even targeted at them by default”.
The changes to the pensioners’ benefits were not enacted by the Air Navigation and Transport Act, although that law did appear to be directed at affording some degree of comfort to the scheme trustees, she said.
She did not see how the issue of the pensioners’ consent was a precondition to the enactment of statutory legislation.
While section 32B of the Air Navigation Act was solely directed at the IASS trust, it did not constitute targeted legislation, she found.
The pensioners’ constitutional property rights were not breached by Section 32B because the reductions they complained of were made under amendments to the Pension Act which they had not challenged.
For those and other reasons, she refused the declarations sought.