Aer Lingus 2014 Annual Report Download - page 124

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122
Following the approval by the Pensions Authority, benefit accrual in the IASS froze and employer and employee contributions to the IASS
ceased with effect from 31 December 2014 and implementation of the IASS solution commenced on 1 January 2015. Specifically, with
effect from 1 January 2015, once-off payments from the escrow structure started to be released into individual accounts in the new current
employee defined contribution pension plan and the new deferred defined contribution pension plan on receipt of correctly executed and
signed waivers. These waive any and all rights to legal action against Aer Lingus Limited and the IASS Trustee in relation to the IASS.
As at 24 March 2015, 42% of waivers were executed. By 24 March 2015, €80.2 million had been paid from the pension escrow. Therefore,
at this date €110.5 million of the €190.7 million remained in escrow to be administered.
Status of waivers (as at 24 March 2015)
Valid Received
Valid %
Received
Outstanding
Outstanding
%
Total
Total %
Active members
1,297
52%
1,213
48%
2,510
100%
Deferred members
1,025
33%
2,054
67%
3,079
100%
Total
2,322
42%
3,267
58%
5,589
100%
Although Aer Lingus Limited is aware that certain parties have threatened proceedings against the company in relation to the IASS solution,
no proceedings have been issued to date and it is not therefore practicable to estimate the financial exposure, if any, of Aer Lingus Limited
should such claims be made and succeed.
Irish Airlines (Pilots) Superannuation Scheme
Aer Lingus Limited has also been involved in a separate set of discussions concerning the Pilots Scheme which is a single employer scheme
for Aer Lingus pilots. As part of the Greenfield agreements negotiated in late 2009 under the auspices of the LRC, Aer Lingus Limited and
the Irish Airlines Pilots Association agreed certain changes to the scheme with the aim of addressing the deficit in this scheme over
time. The changes included an increase in retirement age from 55 to 60, a reduction in accrual rate for future service from 45ths to 60ths
and an increase in member contributions from 7% to 11% of salary. There was no change in employer contributions which remain at 21% of
salary. The changes were approved by the Pilots Scheme trustees and became effective as from 1 January 2011.
At 31 December 2014 (the most recent date for which Pilots Scheme membership data is available), the Pilots Scheme had 929 members,
comprising 468 active members, 96 deferred members and 365 pensioners. As at 31 December 2014 (the most recent date in respect of
which estimated MFS data has been provided by advisors to the Pilots Scheme), the Pilots Scheme was estimated to have an actuarial deficit
of approximately €212 million on the statutory MFS basis.
Aer Lingus’ consistent position is that its liability to contribute to the Pilots Scheme is fixed at its current contribution rate and, accordingly
that it has neither a constructive nor a legal obligation to increase its rate of contribution to the Pilots Scheme, even if the scheme is found to
have insufficient funds to pay all employees expected benefits relating to their current and past employment service. In the absence of
additional funding commitments from Aer Lingus, the trustee of the Pilots Scheme will have been required to take measures to improve that
scheme’s financial position.
Aer Lingus has engaged in discussions regarding the Pilots Scheme with the trustee of the Pilots Scheme and IALPA. The parties have
agreed a form of funding proposal that has been submitted to the Pensions Authority and this funding proposal does not involve any capital
contribution by Aer Lingus Limited either within the Pilots Scheme or outside of the Pilots Scheme. The Pensions Authority approved the
funding proposal on 3 December 2014.
27 Post employment benefits
Defined benefit schemes
The liabilities in respect of the Group’s post employment benefit obligations are as follows:
2014
2013
€'000
€'000
North American Pension (a)
3,450
2,037
North American Post Employment Medical Benefit (b)
2,578
1,999
Post Retirement Income Streaming (c)
13,395
24,580
Other
143
(362)
19,566
28,254