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IASS Dispute – Statement by the Expert Panel

6th June 2014 - Ken Gaughran

On 16 June 2014 the Expert Panel presented their final report on the resolution of the industrial relations issues in The Irish Aviation Superannuation Scheme (“The IASS”) dispute to the Department of Transport, Tourism and Sport, the Department of Jobs, Enterprise and Employment, Ibec and Congress

The Panel has examined the complex industrial relations issues that remain to be resolved arising from the Labour Court Recommendations of 2013 and the terms and impact of the IASS Trustee proposal which issued on February 14th, 2014 on those Labour Court recommendations. The proposed final resolution of these issues has involved the design of separate solutions among the principal employers, whilst recognising the diverse positions of the employers, Unions, the views of other stakeholders included deferred and pensioner members and the IASS Trustee.

Summary of Recommendations

The Panel has recommended increases in the capital sums payable by both employers in respect of active members.

The capital sum recommended in respect of Aer Lingus is an all inclusive €146.7million.

The capital sum recommended in respect of DAA is an all inclusive €57.3 million.

The Panel has recommended some alterations to the Labour Court Recommendations to reflect:

Aer Lingus

1. Lower contributions by lower paid active members;

2. A once off employer pension contribution to take account of some elements of pay which are currently non pensionable;

3. An increase in Stabilisation Payments to €2,000 pa in 2015 and 2016 on a pensionable basis;

4. An amendment to certain technical assumptions.

Daa

1 Lower contributions by lower paid active members;

2 The proposed capital sum has the potential to provide 65% of the difference between the coordinated and uncoordinated pension in each case;

3 There is the potential to achieve a minimum of the accrued co ordinated IASS pension;

4 There is provision for revaluation of 1.5% following an initial five-year freeze period recommended by the Labour Court.

Deferred Members

The Panel recommends that the Principal Employers should amend the manner in which funding for their former staff who are deferred members of the IASS is to be made available to alleviate as much of the impact of the Trustee proposal as is possible whilst also recognising the overall affordability to the Principal Employers of the proposals for active and deferred members.

The Panel is recommending that the IASS Trustee would meet with the employers to agree how this might be achieved for deferred members. This discussion should be informed by a set of principles which the Panel has discussed and agreed with the employers and communicated to the Trustee such that the integrity of the Trustee proposal of 14 February 2014 can be maintained.

Pensioner Members of the IASS

The Panel met with representatives of pensioner members as represented by the ‘Retired Aviation Staff Association’ to hear their concerns.

The Panel explained to them that its process is an industrial relations process, consistent with our terms of reference and that the responsibility for dealing with the pensioner members of the scheme still rests with the IASS Trustee.

The Panel’s recommendations for active members:

· Recognise that the employers regard the IASS as being incapable of being sustained and will not contemplate, in any circumstances, investing any additional funding to address the very significant IASS deficit of liabilities over assets as calculated under the statutory minimum funding standard.
· Accept fully that, as a consequence, a final solution must urgently be framed around acceptance of the freeze and de-risk of the IASS and the introduction of new separate DC Schemes in each case with agreed contribution levels and once off capital contributions into those schemes.
· Acknowledge the need to mitigate the loss on the retirement income of employees and in particular those on lower pay.

These recommendations represent an integrated package of measures in respect of each employer and the Panel requests that the terms are put by the parties to their respective constituents without delay, with a recommendation for acceptance.

Detailed agreements between the parties will need to be put in place to incorporate these recommendations together with the relevant Labour Court Recommendations in each case to form the entire agreement between them on pension and pension related matters to be completed and executed by them contractually in full and final settlement of these matters.

Brendan McGinty, Peter McLoone, Laura Gallagher, Eugene McMahon
Members of the Expert Panel

‘Expert Panel was established to carry out an urgent investigation of how a final resolution of the industrial relations issues relating to the Irish Airlines Superannuation Scheme (IASS) can be secured. Ibec and Congress each nominated an industrial relations expert to lead the investigation, with the support of a financial expert, to comprise the Panel. The Panel members are: Mr Brendan McGinty (Stratify Consulting) and Ms Laura Gallagher (KPMG), and Mr Peter McLoone and Mr Eugene McMahon (Mazars).’ 

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