JOINT COMMITTEE ON TRANSPORT debate -
Wednesday, 2 Jun 2010

Aer Rianta Pensions: Discussion

Chairman

I welcome the following: Mr. Michael Guerin, retired general manager; Mr. Tim McGrath, retired police officer; Mr. Michael O'Dowd, retired duty officer; and Mr. John O'Halloran, retired duty officer, all at Shannon Airport.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they are to give this committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of that evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any Member, person outside the House or official by name or in such a way as to make him or her identifiable.

I propose to take a short presentation from Mr. Guerin, following which there will be questions and answers.

Mr. Michael Guerin

I thank the committee for this opportunity to put our case. I will be as brief as possible, since I appreciate the time afforded us. Our case relates to pensions from our previous employment with Aer Rianta and to the failure of the Department of Transport to honour the commitments on pension entitlements made to Civil Service staff at the time of Aer Rianta's establishment. We were originally recruited into the Department of Transport and Power. When the Government set up Aer Rianta to run the three State airports in 1969, we were assigned to it on the basis that there would be no worsening of our terms and conditions of employment. This was further strengthened in the Dáil on 21 June and 5 July 1973 when the Minister for Transport and Power stated that in no case would any transferred officer's pension rights be less favourable than had he or she remained in the Civil Service. As a result of these commitments, we joined the Aer Rianta pension scheme and payroll.

Office notice 4/68 made a clear commitment to the effect that legislation to set Aer Rianta up would follow within a year or so, but it did not come about until 29 years later in 1998. It made no mention of the transfer of staff or of the rights of staff assigned to the company despite that being a standard practice in all semi-State bodies. For example, former Civil Service staff working in the areas covered by the Irish Aviation Authority, IAA, Telecom Éireann, etc., were assigned to those bodies, transferred through legislation and provided with legal guarantees on pay and pensions. However, the legislation omitted all these factors when it came to setting up Aer Rianta in 1998.

In the late 1990s, concern was expressed about the reducing benefits of the Irish airlines superannuation scheme, IASS, as against those of the Civil Service and many other semi-State bodies, the latter's being based on that of the Civil Service. The IASS pensions are consumer price index-related while the remainder in the Civil Service are pay-related. A number of meetings were held between the Retired Aviation Staff Association, RASA, and the chairmen of Aer Rianta and Aer Lingus as well as the Minister for Transport. However, they failed to effect any improvement. A formal letter setting out our situation was sent to the Secretary General of the Department of Transport on 13 March 2003. There has been ongoing correspondence in the intervening years, but we have not received a direct answer to direct questions on the commitments given by the Secretary General and Minister for Transport and Power of the day. Page 2 of our submission sets out a number of responses that do not deal with the issues we raised.

In the past ten or 12 years, the IASS pension has fallen well behind the Civil Service scheme. It is estimated that anyone who retired before 2000 is more than 50% — approximately €10,000 — worse off than if his or her pension had been calculated in a similar way to the Civil Service scheme. All the staff concerned have retired from the company and there are fewer than 100, including widows, who are now disadvantaged.

The former civil servants brought their pension entitlements to Aer Rianta as property rights and the Department of Transport is contractually bound to honour the commitments given in 1968 and 1973. The staff concerned have a legitimate expectation to have their rights and pensions restored to them. On 13 March 2010, the Minister was requested to have the matter resolved under arbitration or conciliation. To date, no response has been received. We trust that the committee will objectively examine this case and take whatever action it considers necessary. I hope this explains the situation in a broad sweep.

Chairman

As it was Deputy Dooley who invited the group, the Opposition spokespersons are happy to allow him to commence his contribution.

Deputy Timmy Dooley

I thank the committee for affording an invitation to these gentlemen. Their succinct argument is one with which some of us have been familiar for some time. It seems that a transfer of undertaking was given to the gentlemen and their colleagues within the company to transfer from one element of the State, the Civil Service, into what was a new semi-State company. The language highlighted by Mr. Guerin and others over a period relies on the record of the Dáil. When statements are made, it is always the practice that they are accepted and carried on by successors in the relevant position. Having read the documentation and the Dáil record, commitments were given and inferred and they were accepted by staff at the time.

It is inappropriate that we have failed to deal with this matter comprehensively. Due to several deaths, the number of people in question has reduced to approximately 100, including widows. It should not be beyond the capacity of the State, notwithstanding the difficult economic circumstances in which we find ourselves, to honour the commitments made by previous Ministers and recognise that the people in question accepted in good faith the word of the Minister and Secretary General of the day to the effect that neither their conditions nor pensions would be affected by their transfer in any way. It would be wrong of the committee not to reach a positive conclusion. These people are responsible for developing our airport structure and were entrepreneurial in spirit. They might not have worked in an environment that was as unionised as is now the case, an environment that would have ensured the necessary legal documentation was in place. If assurances are given and accepted in the current environment, what has occurred would not be good enough. A union would have ensured the documentation was written in a manner that afforded protection.

The people in question worked hard. Some have found themselves in difficult circumstances, given that the rate at which the pension is increased is restricted to the consumer price index, CPI. If memory serves me well, the increase does not need to be honoured by the trustees. They can make a decision on the pension fund's level. Every member is well aware of the status of all pension funds and the difficulties involved.

Having heard the presentation, I hope the committee will try to move the issue forward and get clarification from the Department and the Minister in a bid to redress a wrong that has been allowed to continue for some time. One recent parallel was the success of farmers' wives in having their pension rights restored. That matter concerned a relatively small number of people and came down to a Minister accepting that an issue needed to be resolved. I welcomed the decision at the time and hope a similar accommodation could be found in this instance. It would need to be done in a manner that would not have wider implications, but it must meet the needs of the people concerned.

Deputy Fergus O’Dowd

Caithfidh mé a rá i dtosach go gcuirim fáilte speisialta roimh mo chol ceathrair, atá suite thall ansin. I welcome the people from Kerry and Clare, one of whom is a relative of mine. I did not know he was here until I saw his name listed. People are entitled to what they signed up to. They served in the public service in the expectation that they would not lose benefits when they changed over. Arbitration has determined that right is on the side of the delegation and the matter has been with the Minister since March. The committee could write to the Minister and, with the assistance of the Ceann Comhairle, we could table a motion on the Adjournment in our names. That would ensure the Minister appears in the Chamber on this issue. We could do this in the next week or so.

Chairman

We want to be helpful and we are at one in seeing what appears to be an anomaly. I refer to a letter sent to Mr. Guerin on 3 September 2003 from John Lumsden, assistant secretary at the Department. He stated:

Office Notice 4/68 stated that the terms and conditions of employment of transferring staff would not be worse than those they then enjoyed. It is clear from the contemporary documentation that no commitment was entered into in respect of any subsequent variation in conditions of employment in the Civil Service once the transfer to Aer Rianta had taken place.

What is the response of the delegation to this? The documentation submitted by the delegation includes a letter dated 23 December 2009 from the Minister which states that the advice from the Attorney General "corroborates and supports the position taken by my Department in dealing with this matter; that Aer Rianta has complied with its obligations to you on retirement in accordance with the terms agreed at the time you accepted a contract of employment with Aer Rianta in 1974". In order for committee members to be helpful, we need some evidence to counteract those points of view.

Deputy Fergus O’Dowd

Is it correct that the arbitrator has made a decision in favour of the witnesses?

Mr. Michael Guerin

The case has not been heard yet.

Deputy Fergus O’Dowd

I am sorry, I thought he had made a recommendation.

Mr. Michael Guerin

We requested him to do so.

Chairman

The essence of the issue is that the delegation would not be worse off than if they were in the Department of Transport.

Deputy Fergus O’Dowd

The terms should be just as good as those of anyone else, notwithstanding the change. They should get the same as everyone else.

Mr. Michael Guerin

The Chairman referred to the legal advice of the Minister. We have no argument with Aer Rianta, or the DAA as it is now, carrying out its obligations. That is not at issue but what is at issue is the commitment given and our acceptance of the terms and conditions in the 1970s for assignment to Aer Rianta.

Chairman

Can Mr. Guerin please spell out for us the commitments given? Mr. Guerin referred to 100 people being involved in this. Have the financial implications of this decision been established? It would help us in trying to push this case if these issues were established.

Deputy Thomas P. Broughan

I fully support the case of the delegation and Deputy O'Dowd's suggestion on how to progress this matter. A grave injustice has been done. Is the delegation unique? When I was the spokesperson on communications for the Labour Party, I recall a similar issue with workers of An Post. They had been civil servants until 1983 and they felt their pension entitlement has been disadvantaged by the fact that An Post became a freestanding company. The staff of the then Department of Posts and Telegraphs who went on to become members of staff at Eircom did very well because they still own one third of Eircom and they receive dividends. However, those who were on the postal side, the old technology side, did badly. I chased the Minister, Deputy Dempsey, and the Taoiseach at the time to resolve it. Is Mr. Lumsden's resistance due to the fact that this could be a test case for thousands of former civil servants now working in agencies? The witnesses are perfectly entitled to the rank of service they had. Some people did better in the 1970s and 1980s in the Aer Rianta scheme than those in the Civil Service scheme. Some of the stonewalling they have met may be due to the fact that some think this is a test case and that the floodgates will open for many other pensioners.

Mr. Michael Guerin

I do not know of any other case. The Deputy is correct in that we are a unique case. I do not know of any other semi-State body where the staff were not transferred into the organisation under legislation. In every other case, such as the telecoms body, An Post, the Irish Aviation Authority and Coillte, staff serving in those areas were transferred under legislation into those organisations.

Chairman

They are benefiting from what the witnesses are not receiving.

Deputy Thomas P. Broughan

Is Mr. Guerin telling us that legally they are retired civil servants rather than retired staff of Aer Rianta?

Mr. Michael Guerin

Yes, we were never transferred and we never resigned from the Civil Service.

Chairman

Did the witnesses just move? What commitment was given at the time?

Mr. Michael Guerin

It was in the office circular No. 4 of 1968.

Chairman

Was this commitment given in writing?

Mr. Michael O’Dowd

I have it here, signed by D. O'Riordan, Secretary General at the Department on 31 December 1968.

Deputy Timmy Dooley

I want to draw the attention of the committee to the fact that we have a vote in the Dáil.

Chairman

The witnesses are saying they have this agreement in writing but it was never included in legislation. What is the difference in pension if the witnesses had received what they say they are entitled to?

Mr. Michael Guerin

It varies with length of service and grades. We estimate it at €10,000 to €12,000 on average across 100 staff.

Chairman

As far as Mr. Guerin is concerned this does not set a precedent for other people.

Mr. Michael Guerin

Not as far as I am aware. Everyone else was legally transferred into the organisations concerned.

Deputy Paul Connaughton

The vote in the Dáil will upset this discussion. I welcome the delegation. Was the airport security force in the same boat as the delegation? Were they treated differently?

Mr. Michael Guerin

We are all civil servants.

Deputy Paul Connaughton

Were they at the same level as the delegation before the transfer happened?

Mr. Michael Guerin

There are different levels in every organisation.

Deputy Paul Connaughton

The delegation's letter states: "The Company has already conceded this principle to the Airport Security Force and we now seek to have this extended to all other transferred staff."

Mr. Michael Guerin

A document set out the position but the Department cannot find the original and is not honouring it. That is the basic problem. The company and the Department failed to trace the original even though Mr. O'Halloran and Mr. McGrath have copies of the letter. They will not accept the copies.

Deputy Paul Connaughton

It is obvious that right is on the side of the delegation but the problem is always whether a case such as this will open the floodgates for everyone else.

Mr. Michael Guerin

Not to our knowledge.

Chairman

Are people in Dublin in the same situation?

Mr. Michael Guerin

Cork Airport and Shannon Airport were the only two airports managed by the then Department of Transport and Power. Dublin Airport was managed by Aer Rianta.

Chairman

Does this only apply to Cork and Shannon? Is the delegation seeking that its pension from now on be increased?

Deputy Paul Connaughton

Is the delegation seeking retrospective payment?

Mr. Michael Guerin

Yes.

Deputy Timmy Dooley

With respect, the first thing the gentlemen are looking for is recognition of the principle. It is a matter for the arbitrator to try to resolve the matter of the deficit.

Chairman

Is an arbitrator examining this issue?

Mr. Michael Guerin

We have not heard. We suggested it be referred to arbitration, but we have not heard from the Minister.

Chairman

The Minister has not agreed to go to arbitration.

Deputy Timmy Dooley

I propose that the appropriate officer in the Department come before the committee for a detailed discussion on what has been said here to allow us to tease out the matter. We could then consider how we should proceed.

Chairman

Is that agreed? Agreed. We will speak to the Minister about the precedent and the legal advice received from the Attorney General which are the stumbling blocks. We consider the delegation has a reasonable case and it can take it there is all-party agreement on the committee being supportive.

Mr. Tim McGrath

I do not want to embarrass anybody, but as airport director Mr. Guerin brought Shannon Airport from the point where it was a very small and simple base to a level where it became a thriving industry in the area, through the development of Aeroflot services, the fuel farm, Aer Rianta International and other aspects which enabled the airport to develop in a very significant way. He is to be congratulated for this.

Despite guarantees from the Minister that our conditions would not be worsened, we consider they have been. What we seek is a genuine entitlement. I thank the committee.

Chairman

We are all agreed and sympathise with the delegates. We will try to secure their rights for them, although we cannot give any guarantees. The Minister has the final say and has received legal advice. We will certainly take up the issue and do our best. I thank the delegates for attending and apologise for cutting the meeting short.

The joint committee adjourned at 4.25 p.m. until 3.45 p.m. on Wednesday, 16 June 2010.