Barry O'Halloran

Aer Lingus's pension scheme may not be able to meet its committments to existing and future beneficiaries, it was claimed at a Dáil committee hearing yesterday.

Fine Gael spokesman on transport, Mr Denis Naughten, told the Dáil select committee on transport he believed the State airline's pension fund would not be adequate in the short term to pay retired workers the defined benefits to which they are entitled.

Mr Naughten said that he had been advised that to meet this commitment, the company would need to invest the equivalent of 20 per cent of each worker's salary into the fund.

However, he pointed out that the current level of investment stood at just over 12 per cent of pay, with workers and the airline contributing 6.35 per cent each. "The funds will not be adequate to meet the demands on them," he warned. "They may not be able to meet the defined benefits as set out in the fund."

He later said he was informed that the airline's retired workers, and those still in employment, could be hit in the short term.

The committee was debating the Aer Lingus Bill, 2003, the legislation needed to pave the way for the national carrier's privatisation. Mr Naughten was seeking an amendment guaranteeing that retired workers' pensions would be increased in line with national wage agreements.

Both Mr Naughten and Labour transport spokeswoman, Ms Roisin Shortall, expressed concern at the general level of pensions paid to former Aer Lingus workers.

The Minister for Transport, Mr Brennan, said the legislation provided that Aer Lingus would manage its own pension fund. However, he said that the Government shared the opposition deputies' concerns.

He told them that Aer Lingus chief executive, Mr Willie Walsh, was due to meet Retired Aviation Staff Association representatives (RASA) to discuss the issue.

An Aer Lingus spokeswoman said the airline's fund qualifies as a defined benefit scheme under the Pensions Act, 1990. "At the last actuarial evaluation on March 31st 2003, the fund satisfied the minimum standards as set out in the Pensions Act, 1990," she said.

During the debate, the committee passed an amendment requiring the Dáil to approve any sale of Aer Lingus before it goes ahead. Previously, the Bill allowed the Minister to sell the airline without going to the Oireachtas. A number of opposition TDs had been seeking this change to the Bill. However, Mr Brennan tabled the amendment himself yesterday.