Timmy Dooley (Clare, Fianna Fail)
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I welcome the fact the Minister is in the Chamber to discuss this matter. The plans by Aer Lingus and its unions to plug the €780 million hole in the pension scheme have been rejected by the Pensions Board. In May, following six months of talks, the Labour Court recommended a deal involving payments from Aer Lingus and the Dublin Airport Authority, DAA, totalling almost €200 million and freezing the existing benefits. The Labour Court plan involved Aer Lingus paying approximately €110 million with regard to active members of the scheme and €30 million for deferred members, in other words those who have left but not reached retirement. I understand the DAA was to pay approximately €52.75 million for active members and an undisclosed sum for deferred pensioners.

The Pensions Board told the trustees of the Irish airlines superannuation scheme, IASS, that the outlined proposal to meet the minimum funding standard for the scheme was not acceptable. The IASS covers workers in Aer Lingus, the Dublin Airport Authority and the now defunct SR Technics. The proposal stated that it would be up to 70 years before the scheme would meet the funding standard. The Pensions Board rightly stated that such a lengthy derogation from the obligation to meet the funding standard would not be consistent with the objectives of the pension fund.

It is incumbent on the Minister to bring proposals to Government to deal with the issue. I do not expect him to hide behind the fact that he is a minority shareholder in Aer Lingus, which is the case. Aer Lingus is a publicly traded company and the Minister is a passive shareholder in that regard. However, he is a significant shareholder and therefore as Minister, he should have a view. The Government will have to take a position on it.

The Minister is the only shareholder and consequently the owner of the Dublin Airport Authority, which has a significant requirement to meet the funding standard as set out by the Pensions Board. If nothing else, he owes it to the workers, those who have departed the company and are deferred pensioners, and to the pensioners to provide certainty on their future. It is a considerable worry, in particular for those who have gone beyond working age and who depend on their pension. They want to know whether they will be able to sustain their standard of living and stay in their homes. It is a tremendous worry for people who are reaching the latter days of their lives and who hope to live with a degree of certainty and security to find that ongoing concern has been raised about their future. It is difficult for everyone but in particular for that cohort.

I accept that there is a pension crisis but a pension is really only a deferral of salary. People have worked for it and made their contribution. They did not get the type of pay increases they might have expected but they did expect that they would have certainty at a later stage. Many pensioners find themselves in a difficult position. Some of them had nest eggs which they hoped would assist them in conjunction with their pensions. Many of the nest eggs have been lost because of poor investments in financial institutions on which they got advice from financial advisers. All the money is gone. Some sought to help their sons and daughters to get on the property ladder but they are now in negative equity and are not in a position to give back what was borrowed on the understanding that it might be paid back. Others invested in education for their families, some of whom have now emigrated, are out of work or generally not in a position to help their parents. I am not trying to heap the impossible upon the Minister. I know he will look on the situation compassionately. However, we need Government action for this particular cohort of workers who have served the State well. It is a group that deserves the efforts of the State to try to bring some certainty and clarity to their future financial needs.

Leo Varadkar (Dublin West, Fine Gael)
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At the outset I should make it clear that as Minister for Transport, Tourism and Sport I have no function in relation to this matter, and for that reason there is little I can say.

The resolution of the funding difficulties in the Irish airlines (general employees) superannuation scheme, IASS, is primarily a matter for the trustees, the members of the scheme, the companies participating in the scheme and the regulator of such pension schemes - the Pensions Board. The IASS is a multi-employer scheme involving the employees of the Dublin Airport Authority and the former SR Technics, SRT, as well as Aer Lingus. It is estimated that Aer Lingus membership constitutes around 69% of the total, with DAA and SRT representing 27% and 4%, respectively.

The funding situation is clearly of concern for the 14,800 or so members of the scheme and their families. Indeed, similar funding concerns are affecting many defined-benefit pension schemes at present across the country. It has been reported that the Pensions Board has written to the trustees of the scheme indicating that some aspects of the outline funding proposal for the scheme are not acceptable to the board. It is understood that the Pensions Board and the trustees will have further discussions on the matter.

The future funding arrangements in the IASS scheme have been a key uncertainty in Aer Lingus's finances in recent years. As a minority shareholder in the company, the Government would welcome a resolution of the matter and has always encouraged the parties to engage fully in the process using the State industrial relations apparatus where necessary. However, as Minister I do not have a role in the resolution of the funding difficulties - that is a matter for the trustees, the companies participating in the scheme, and its members. They must agree to any decision that is made.

The various stakeholders in the scheme have been engaged in discussions regarding the funding of the scheme for a number of years now. After failure to reach agreement in previous discussions, in November last year IBEC and ICTU issued a joint statement requesting that the Labour Relations Commission, LRC, make contact with Aer Lingus and its union groups on the funding of the scheme. The parties then engaged with the Labour Court for the purposes of setting out recommendations on the resolution of the pension issue and the court issued its recommendations on 24 May 2013. Separate recommendations were issued to DAA and Aer Lingus on the matter. Following consideration of the recommendation in relation to Aer Lingus, the company stated that it believed that the Labour Court's recommendation represented a compromise that could form the basis upon which a solution could be implemented in the interests of all parties, including shareholders, employees and customers. The Labour Court recommendation included a cash injection of €110 million to a new defined-contribution scheme and a one-off contribution of €30 million to the same new defined-contribution scheme in respect of former employees who are deferred members of the IASS. Aer Lingus stated that any implementation of the recommendation is dependent on a series of further steps. These steps include, but are not limited to, the following agreements being reached and approvals being achieved: agreement with the Irish Congress of Trade Unions and the trade unions concerned; agreement by the trustee of the IASS with the sponsoring employers; Aer Lingus shareholder approval; trade union member ballot approvals; approval of IASS rule changes by affected members; and the successful conclusion of a range of implementation steps, including rule changes, by the trustee of the IASS among others.

The company has said that if these further steps are achieved it will seek shareholder approval to implement the measures. The State's shareholding is in the name of the Minister for Finance, and the relevant Ministers will consider any such proposal carefully before casting a vote on the matter. The company said it would engage directly with ICTU and the trustees on the matter. The company will issue further updates as and when appropriate.

Timmy Dooley (Clare, Fianna Fail)
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I thank the Minister for the comprehensive reply. I accept the point that it is not necessarily within the Minister’s gift to resolve the matter but he is a significant shareholder. I worked out that he has approximately an 18% responsibility through his shareholding in Aer Lingus and a 27% responsibility through his relationship with the DAA. Therefore, the Minister has a 45% responsibility in terms of the overall pension pot, which is significant. I do not think the Minister can afford to rely, or allow the pensioners involved in this situation to rely, on others to resolve the problem.

I understand the derogation that exists. I also understand the responsibilities of trustees of the pension fund. The State has a commitment to the workers as they were State employees - many of them still are - and therefore there is a responsibility on it to look after its employees and former employees. Many staff who were part of the privatisation of Aer Lingus believed they had certain insurances in that regard, as did those who worked with SR Technics. I appeal to the Minister to examine the matter from a legislative point of view, if necessary, or from the perspective of a Government decision in terms of putting in place a structure by which the pension fund could be brought in line with the requirements of the Pensions Board on the standard of funding that is required. I do not believe the State can in any way wash its hands and leave it to IBEC and others or the industrial relations machinery to resolve the situation. The Labour Court has already done its work and it has reached what it believes to be a suitable solution but that does not comply with the Pensions Board regulations. The latter indicated that it would take 70 years to reach the funding standard. Therefore, the Government must act.

Leo Varadkar (Dublin West, Fine Gael)
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I noticed in Deputy Dooley’s original comments that he said he agreed with the position of the Pensions Board that the solution put forward by the Labour Court was not acceptable. That will come as a surprise to many of the workers in Aer Lingus, the DAA and some of the pensioners, many of whom share my view that the recommendations made by the Labour Court would have resulted in a fairer outcome by which they would have had security about their pensions.

Any proposal to amend legislation on pensions would not be under my remit. Pensions and the Pensions Board are under the remit of the Minister for Social Protection. Any change in legislation that affected this and other defined benefit schemes would need to come from her Department and not mine.

If the Deputy has specific proposals on how to resolve this particular issue without recourse to legislation, I would be interested in hearing them. It is worth pointing out that the Government's responsibility as a shareholder is not just to the employees and former employees of the company. The shareholding is held on behalf of everyone in the State. I must bear in mind the fact that any solution could devalue that shareholding in certain ways.

The next step is the meeting between the company and the trustees. I hope that it will lead to some modification of the proposals that would make them acceptable to the Pensions Board, but that is not a determination for me to make.