LCR20440

In a joint statement issued by IBEC and Congress, dated 9^thNovember 2012, the terms agreed were set out as follows: -

• 'IBEC and Congress have considered the current position in relation to this dispute and believe that solutions need to be urgently found to the current difficulties between the parties. It is clear that the issues at the heart of the dispute are difficult and complex and arise in the context of finding an acceptable solution in Aer Lingus arising from the current Irish Airlines Superannuation Scheme and in respect of future pension arrangements.
  
  We note that the Labour Relations Commission (LRC) facilitated intensive discussions with the parties which were adjourned indefinitely on October 25^th. The Group of Unions has since issued notice of industrial action to take place on November 19^th. In order to find an early resolution we recommend that:
  
  • 1. As a matter of urgency IBEC and Congress request that contact be made with both the Group of Unions and the Company by the LRC. Having consulted with the ‘Technical Group’ established by the LRC to assist the talks process and having reviewed all outstanding issues, the Chief Executive of the LRC, should report formally to the parties on the outcome of the discussions held to date and give his assessment of the measures needed to achieve a final resolution of those issues were differences remain.
    2. The report shall be considered by the parties who shall advise the LRC of their stated positions.
    3. Where there are outstanding matters on which agreement still has not been reached the parties are encouraged to utilise the dispute resolution machinery of the State. They should refer those matters to the Labour Court for interim recommendations which should set out the main parameters for resolution of the dispute.
    4. The recommendations of the Labour Court should then be considered by the LRC ‘Technical Group’ with a view to finalising the design of the new pension arrangements. The outcome will be considered by the parties in conjunction with their respective stakeholders. Any residual outstanding matters can be referred back to the Labour Court as necessary for final recommendation as part of a composite and definitive solution.
    5. Both parties should cooperate fully with the above process and engage meaningfully with a view to finding a speedy resolution. As a result the Group of Unions should withdraw the notice of industrial action.
    
  IBEC and Congress will invite the Labour Relations Commission to proceed with the parties on this basis as soon as possible and will remain in close contract with the parties.'
  

There are a number of key issues that need to be resolved before a comprehensive arrangement can be designed which will provide clarity on the pension entitlements of affected staff. There is an equally important requirement for clarity concerning the commitment required of the Company and its employees for the effective delivery of those entitlements.

In line with the terms of the IBEC / Congress statement the intention of the Court in this interim recommendation is to provide guidance to the parties on the features that should form part of the new arrangements so as to allow the ‘Technical Group’ to finalise its design. The conclusions of the Technical Group will then be considered by the various parties. It is envisaged that in the event of final agreement not being reached in that process outstanding issues will be referred back to the Court for a final recommendation.

Issues considered by the Court
The Company have put forward proposals on the structure of a new pension scheme from which the pension entitlements will be met. The scheme as proposed will be a defined contribution scheme in the true sense. It will replace the Irish Airlines (General Employees) Superannuation Scheme (IASS). While the scheme as proposed does not, by its nature, permit a guarantee to be given of a particular level of benefit relative to final pensionable salary it is necessary to establish a target or indicative level of benefits around which the scheme will be designed. A significant investment of Company funds in the new scheme will be required and in that context there is an issue around the need for staff cooperation with cost offsetting measures.

These matters are addressed in the interim recommendations that follow.

• 
  1.Structure of the scheme
  The Court recommends that the general structure of the new arrangements, as proposed by the Company, including the proposed contribution levels, be accepted.

  2.Target Outputs
  The parties made extensive and helpful submissions on the target outcomes that should be expected from the new scheme. The scheme will be coordinated with the State pension. The previous scheme, while expressed to be similarly coordinated was, in reality, uncoordinated for the vast majority of beneficiaries. The Unions argued that the effect of coordination would disproportionately impact on those on lower levels of pensionable pay as the State pension would have the effect of significantly reducing the level of benefit that they are likely to obtain, in cash terms, from the new scheme. They put forward proposals directed at ameliorating the practical consequences of coordination which, in effect, involved a weighting of the output from the new scheme by reference to different levels of pensionable pay. The Court sees merit in that approach and has taken it into account in its recommendation on this point.

  Having considered the submissions of the parties the Court recommends that the target output from the new arrangements be structured as follows: -

  
  Recommended Target levels of Benefit expressed as a % of Final Pensionable Pay (FPP)
  
  

  Pay Bracket (FPP)	Below €30k	Between €30k - 60K	€60k and above
  Target % of FPP	89% -84%	80% - 73%	70% - 66%

  • Note 1. This target %’s of FPP are indicative and should not be construed as definitive or guaranteed. They are predicated on assumptions which will be used by the Technical Group in the design of the new scheme.
    Note 2. These targets are based on the Company and the employees contributing the maximum contribution provided for in the Company’s proposal. Where lesser amounts are contributed the outputs will reduce pro rata.
    Note 3; The bands of targeted % of FPP should apply to salaries within the pay brackets with the higher range of the targets applying to the lower salaries within the pay bracket.
    
  3.Cost offsetting measures
  The Court recommends that following the consideration of the Court’s recommendation on target levels of benefit by the Technical Group the parties should have discussions with a view to reaching agreement on the question of cost offsetting measures. These discussions should have regard to the overall level of investment necessary in order to attain these targets and the mode by which a staff contribution can be made by way of savings in payroll costs.

  4.Time scale
  The Court recommends that the Technical Group should meet as soon as practicable following the acceptance of this Recommendation and should finalise the design of the new pension arrangements. The parties should then have discussions on the outcome of the Technical Groups deliberations and they should also deal with the matter referred to at 3 above.

  If final agreement is not reached in those discussions by 31^stJanuary 2013 outstanding matters may be referred back to the Court in accordance with Clause 4 of the IBEC Congress statement.

  The Court will facilitate the parties with the earliest possible hearing date with a view to having a final recommendation issued not later than 1^stMarch 2013.