Pension - Restructuring

PENSIONERS WILL SUFFER A VERY IMMEDIATE PENSION CUT

IN MONTHLY PENSION FROM JANUARY 2015 OF UP TO 20%

Reduction in IASS Benefits. Restructuring - Proposals from Employers/Trustees and implemented on pensioners without consent and without compensation!!!

In January 2015 IASS Trustees implemented monthly pension income cuts following acceptance by the Pensions Authority of a funding proposal put forward by Aer Lingus, daa and Irish Pensions Limited ('the 'IASS Trustee)

In April 2014 the IASS Trustees wrote to members outlining their proposals to resolve the deficit in the Defined Benefit Scheme. For pensioners they plan to reduce your pension up to the maximum permitted by the legislation. This legislation was only signed into law on Christmas Day 2013 by the President.

The letter to members and RASA's response can be viewed by clicking on the attachment at the bottom of this webpage. [RASA's response on Webpage 8.4]

Some recent history -

In July 2013 the Scheme's Actuary circulated a document outlining the decisions of the Trustees that will be implemented based on 'Freeze and DeRisk' proposals made by the employers. This means that the scheme will not have any future accruals or new members.

In October 2013 further benefit cuts were proposed by the Trustees and did not include any cuts in respect of pensions in payment as they were still protected 100% under legislation. These benefits cuts for deferred/active members, amongst others, include coordinating pension with State pension at NRD of 65; removing statutory revaluation on deferred benefits; increasing normal pension date/age to be in line with State pension age; flat 12% cut in pension; compulsory commutation of 25% lump sum at a factor of 9:1 [which amounts to a further 15% reduction on individual pension with no dependants and changing the accrual rate]; fixed pension with no adjustments for price inflation [assuming annual inflation at 2% will lose close to 25% over 10 years of its purchasing power].

In February 2014 the Trustees revised a number of these proposed benefit cuts. This followed discussions with employers and Trade Unions. They do not intend to increase the normal pension date/age in line with State pension age [this increases the deficit]; or introduce compulsory commutation. Instead they will reduce the pension of pensioners to the maximum permitted by legislation i.e. 10% for those with pensions between €12k and €60k and 20% for those over €60K. Those with pensions up to €12k will not attract this cut. They do not intend to recognise any element of a person's pension purchased for uncoordination (i.e. those who paid the higher contribution rate). These proposed reductions will not apply to UK based members.

As previously noted this will contribute a capital value of the order of €110m towards the deficit reduction. In addition there will be a 'fixed pension for life' with no adjustments for price inflation. The Trustees also intend to purchase Sovereign Annuities, which passes the risk of default to the pensioner rather than standard annuity in the event that the Scheme goes into wind-up at a future date. By making this resolution the calculation of the liabilities under the Minimum Funding Standard is lower.

'Early Leaver' Windfall'

A coordinated/integrated member of IASS pay reduced contributions for an coordinated pension at normal retirement date. However coordinated/integrated members who leave their employment before their normal retirement date can draw down an uncoordinated/non-integrated IASS pension. This uncoordinated pension is not funded by contributions. The scheme became coordinated with Social Welfare in 1970's as required by the Government and the Department of Transport in order to reduce employer pension contribution costs.

It is estimated that approximately one-third of the current Minimum Funding Standard deficit is due to the 'early leaver' windfall. This occurred following numerous employer redundancy/restructuring schemes and a stated intention to set up separate new pension schemes from the early 2000's and the 'early leaver' windfall became part of the narrative. The changes to the scheme now proposed by the Trustee is to eliminate this 'early leaver' windfall and restore coordination/integration, except in some specific cases. The Trustee will also remove statutory revaluation and in addition there will be a flat reduction of 20% in accrued benefits for active/deferred members. The Trustees stated they will take the recent Element Six High Court judgement in account. You can read this case judgement Greene & ors - v - Coady & ors, 4th February 2014 on http://www.courts.ie/ . You may also be interested in visiting the IAPF’s website to listen to THE IMPACT OF THE ELEMENT SIX JUDGEMENT Feb 2 2014. http://www.iapf.ie

Compensation for Defined Benefit losses - Nothing for those in receipt of pensions

Following claims from active and deferred members the employers did commit to providing augmented contributions/funds to cover some compensation for lost benefits for both active members and former[deferred] members. The Trustees will take these funds into account. RASA also lodged a claim for such defined benefit losses with the employers in November 2013.

Please note that NONE of these contributions/funds are being directed into the IASS fund to address the deficit but the Trustees are taking them into account.

None of these negotiations involve pensioners or any compensation for the reduction in pensions

or a debt on the employer .