Aer Lingus workers left with 4% of their pensions

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roland

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http://www.rte.ie/news/2012/1009/aer-lingus-pensions.html

The headline is bad enough, but when you look at the detail it's even more shocking:

Retired members get to keep 100% of their pension
Current employees are left with 4% of what they are due

How many more schemes are like this and will the fat cats at the top all retire to the sun with 100% of their entitlement leaving nothing for the workers?
 
It's nothing to do with the fat cats.

All retired employees, irrespective of their weight, get first call on the pension fund.
 
roland said:
How many more schemes are like this and will the fat cats at the top all retire to the sun with 100% of their entitlement leaving nothing for the workers?
Click to expand...

Those that are retired were all workers before they retired.

That said, if the percentage quoted is accurate, it's a terrible blow for those affected.
 
I'm speculating here as I have no knowledge of the finances of the DAA pension scheme. But it can happen in a DB Scheme that if there are a high number of pensioners relative to the numbers of active members, the cost of securing the pensioners' entitlements can leave very little over for anyone else.
 
Here’s an earlier article where it stated in 2010 there was close to 2 retired/deferred pensions to be supported by every 1 active employee. This is clearly a scheme that can’t work.

The situation with regard to Aer Lingus is particularly illustrative of the problems.
On March 31st[2010], the airline had 3,004 active members but 3,700 deferred members and 3,440 pensioners.
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Since the government are involved there’s the attitude that DB schemes are good, DC schemes are bad, and there’s an unrealistic attitude to solving the problem. The protection of existing DB pensioners goes too far as well, the same arguments that protect a retired cabin crew member on maybe 15k a year are used to protect Eugene Sheedy of AIB on 500k a year and Bertie on 150k. How about a modest cap on how far that protection can go.

I don’t quite understand how they’ve gone from 302m in March 2010, to 490m in Oct 2010 to 750m in Oct 2012. We’ve had one of the strongest recoveries in the stock market over the last couple years. I’d be intrigued to know what they’ve invested in. But possibly it’s due to redundancy and wage cut programs?

However on the other hand it might be argued the funding requirements for DC funds is too strict. If a fund is several billion in size, having a temporary funding hole in the 100s of millions isn't necessarily a problem. If the stock market stages a 10% recovery the fund might be back in surplus.
 
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