I welcome the Minister for Social and Family Affairs back to the House.
Social Welfare and Pensions Bill 2009: Committee Stage.
Sections 1 and 2 agreed to.
NEW SECTION.
I move amendment No. 1:
In page 6, before section 3, but in Part 2, to insert the following new section:
3.—The Minister shall as soon as may be after the passing of this Act prepare and lay before both Houses of the Oireachtas a report on the implications of new control measures to make it compulsory for a registered nursing home (public and private) to notify the Department if a person is resident with them for a month or more.".
I welcome the Minister. She would already be aware that we have had cases where an older person has been admitted to a nursing home but continues to receive a household benefit package and fuel allowance long after he or she has left the home. Currently, the issue is left to the person or his or her family to deal with when it would be the last thing on their mind.
As I mentioned earlier, control measures for combating fraud are a serious issue which I have prioritised. I am not suggesting for one moment that fraud is behind this issue but older people in long-term residential care are not entitled to the household benefits or the living alone allowance. We do not have a system where there is an automatic notification from the nursing homes, although we have our own measures, even by way of investigating where usage is very low or non-existent with regard to electricity, for example. We may be able to terminate household benefits in such an event. We may also contact families in writing, etc.
It is a good idea for us to have a greater connection between nursing homes and ourselves. I do not propose to accept the amendment because it is looking for a report, although I am aware that is the mechanism which must be used. The idea behind it is a good one and I will investigate over the next few months how we can have a greater relationship with nursing homes and how they may notify us of issues.
Amendment, by leave, withdrawn.
Section 3 agreed to.
Amendment No. 2 not moved.
Section 4 agreed to.
SECTION 5.
Question proposed: "That section 5 stand part of the Bill."
My party is opposed to this entire section because there is a complete lack of clarity with regard to how the new section 62(5)(a)(iv) will operate. The Minister failed to answer any of the questions put to her in this regard on Second Stage.
This section relates to customer activation, information profiling, the new short-term schemes, etc. The Department of Social and Family Affairs is fortunate that it has access to the skills of 60 facilitators and 40 adult guidance officers. It also has access to vocational education committee information officers, is involved with FÁS and is involved in partnerships with local employment schemes. These various individuals and groups are in a position to provide people with information. This is significant for two groups of people, the first of which is that comprising 18 or 19 year olds. We need to ensure these individuals can obtain access to the courses they wish to pursue.
It is important that people who are claiming the jobseeker's allowance should make themselves available for training. The national employment action plan has been extremely successful in removing people from the live register. This section will ensure they do not merely sit back and state that they are not willing to participate. We are merely putting into legislation what is, in effect, already happening with regard to the number of people we are referring. The section is designed to encourage people to avail of upskilling, training and educational opportunities in order that they might take up good job opportunities when they arise.
Question put and agreed to.
SECTION 6.
Amendments Nos. 3 and 4 not moved.
I move amendment No. 5:
In page 9, between lines 47 and 48, to insert the following new subsection:
"(5) The Minister shall, prior to the commencement of this section, publish the types of courses that shall apply under this section, the availability of those courses and the arrangements that have been made to ensure sufficient provision of public transport to such course.".
This amendment relates to the publication of information relating to particular courses and suggests that sufficient public transport be made available to those attending such courses.
Section 6 is designed to encourage increasing numbers of young people to avail of educational and training opportunities. Our priority, therefore, is to ensure an adequate number of places will be available in the first instance. The Tánaiste and Minister for Enterprise, Trade and Employment, the Minister for Education and Science and I have, through meetings of the Cabinet sub-committee on economic renewal, made good progress on ensuring we can meet the needs of the young people to whom I refer.
Thousands of courses are available throughout the country because different VECs and FÁS centres provide such courses. In addition, courses are available at Traveller training centres and people can avail of adult literacy courses. As a result, it would be impossible to publish a list of courses for the entire country. However, we are making arrangements to make available to 18 and 19 year olds who are signing on information on courses provided locally. This will allow them to investigate the courses that might best suit their needs. Their facilitators will then decide whether the courses they have chosen are appropriate. If the latter proves to be the case, these people can then be transferred to the relevant courses and instead of just receiving €100 jobseeker's benefit they will also obtain the allowances attaching to the courses they have chosen to pursue.
I accept that the intention behind the amendment is to ensure information is made available. However, it would be impossible to provide such information on a nationwide basis. We will, therefore, provide such information on a local basis.
I thank the Minister for that. Will she ensure that in areas where public transport is either limited or non-existent, consideration will be given to providing such transport?
People on FÁS courses are paid travel and child care allowances. It will depend, therefore, on the nature of the course on which a person obtains a place whether he or she will obtain an allowance for travel.
Amendment, by leave, withdrawn.
Question proposed: "That section 6 stand part of the Bill."
I oppose this section for the same reason I opposed section 5. There is a complete lack of clarity with regard to how the new section 141(4)(d) will operate. Again, the Minister did not provide clear answers to the questions put to her on Second Stage.
As already stated, an 18 year old who signs on will, if he or she is fully qualified, receive a payment of €100 per week. However, he or she will also be given information on the providers of education and training courses in the local area. If he or she participates in a Youthreach, FÁS, Traveller centre or back to education course, he or she will also qualify for the relevant allowance. This provides young people with a real incentive to participate in courses rather than beginning their adult lives by being dependent on social welfare payments. The Bill indicates what will be the actual allowance. As already indicated, however, there are many exemptions. For example, those with children, those leaving State care and those who are homeless and vulnerable will be exempt. People with a genuine need and who do not have families to support them are specifically listed.
We must encourage young people to avail of education and training opportunities. As stated earlier, the two pilot schemes were not successful. The reason for this was that there was no financial incentive for the young people involved. There are those who do not want to be on welfare payments and who want to get off them as quickly as possible. However, there are others whose families have been on such payments for generations and who would be happy to remain in their current situation rather than taking control of their lives and ensuring they are no longer dependent on welfare. We must target these individuals.
Question put and agreed to.
SECTION 7.
Amendments Nos. 6 to 9, inclusive, are related and can be taken together by agreement. Is that agreed? Agreed.
I move amendment No. 6:
In page 10, line 1, to insert the following new subsection:
"(1) The Minister shall, within three months of the commencement of this section, ensure that all rents the subject of this section shall be renegotiated to reflect existing market conditions.".
I welcome what the Minister said in respect of this matter on Second Stage. AmendmentNo. 8 states:
(1) The Minister shall, within three months of the commencement of this section, ensure that the Revenue Commissioners are notified of the details of all properties to which a payment under this section applies or shall apply in the future.
We are seeking that landlords and their properties should be registered and that they should pay tax at the correct rate. In other words, those who are set to gain the most should pay the tax.
Everyone wants to ensure the rent scheme will operate properly and that ultimately the money will only be paid to legitimate landlords who are providing accommodation of a proper standard. At present, community welfare officers are responsible for disbursing this funding. However, matters such as housing, the condition thereof, etc. come under the remit of the local authorities. I have been working closely with the different groups to try to ensure that not only will we obtain best value for money but also that the needs of the people who avail of the scheme will be met.
One of the difficulties which arises is that rent supplement is not paid directly to landlords. It is paid to tenants who then pay it to their landlords. Currently there is great choice available so there is no reason for a tenant to be in substandard accommodation or to have a dodgy landlord. That can be rectified. We are examining the operation of the rent supplement scheme to see how it can be improved. The changes in the Bill reflect the current property and economic situations and that is why we had to introduce them.
I welcome the Minister's reply. Unfortunately, not all properties conform to the prescribed standard. Better legislation and enforcement is required to ensure landlords are compliant and pay their dues. I look forward to the Minister introducing the necessary provisions.
Amendment, by leave, withdrawn.
I move amendment No. 7:
In page 10, line 1, to insert the following new subsection:
"(1) The Minister shall ensure that any reduction made in a payment made under this section shall be proportionate and reflect the market reality in the residential area to which it applies.".
Is amendment No. 7 being pressed?
I wish to comment briefly on the amendment.
It was discussed with amendment No. 6.
So I cannot speak on it.
Is amendment No. 7 being pressed?
Yes, because the Leas-Chathaoirleach would not let me speak on it.
Amendment put and declared lost.
Amendments Nos. 8 and 9 not moved.
I move amendment No. 10:
In page 11, lines 24 to 48 and in page 12, lines 1 to 10, to delete paragraph (c).
The amendment deals with child benefit as outlined in page 11 of the Bill. We are especially concerned about low income families with teenage children in education. The Bill proposes to remove their only form of support while they continue their education. As the Minister well knows from her previous portfolio there are many families with teenage children in education and many low income families with children who are still in second level education at 18 years of age who rely on child benefit while their children do their leaving certificate. We feel strongly on this point and look forward to the Minister clarifying the section.
I thought amendment No. 10 was about rent supplement changes.
I am sorry. I got the amendments mixed up. I wish to withdraw that amendment.
Amendment, by leave, withdrawn.
Question proposed: "That section 7 stand part of the Bill."
I wish to make only one comment on section 7 because it was discussed very well on Second Stage. The new proposals on the rent supplement put many people at risk of homelessness.
Owing to mobile telephone interference I did not catch what the Senator said.
I do not know what happened there.
It was somebody else's telephone.
Yes. The new proposals will put many people at risk of homelessness.
I received a representation on this issue at lunch time. The person in question, who is a single man, will not be able to afford his existing accommodation because of the changes in rent supplement. I have raised previously the issue of single men who are down on their luck. That man will not be able to continue to pay his rent.
It has been stated that rents have come down but that is not the case everywhere. We also discussed negotiating with the landlord about the rent. That is easier if one is in private rented accommodation and one is working. If a landlord knows that one is getting supplementary welfare he or she will not be as amenable to negotiation because he or she is under the illusion that the tenant is getting the money from the State.
To try to support tenants in that situation we will be writing to them outlining the reductions that have been made to the rent supplement so that they can use the information in discussions with their landlords. We will also be advertising in the national print media so that landlords will be aware that cuts have been made. It will not be a case of them assuming that tenants are receiving money from the State and that they do not believe them. Landlords throughout the country are reducing rents for private tenants and we are expecting they will do the same for those on rent supplement.
I accept that rents for single people have not reduced to the same extent. We will take that into account in our review of new tenancies and rent reviews.
Especially for single men.
Yes.
Question put and agreed to.
SECTION 8.
Question proposed: "That section 8 stand part of the Bill."
I oppose the section because it halves and eventually abolishes the early child care supplement.
There is a bit of a conflict in that people welcome the introduction of the preschool year. They think it is a good idea but it has to be funded from somewhere. We are not in a situation where we can continue to pay the supplement and introduce the preschool year. On balance, it is better to take the direction we did.
We oppose the section also. We acknowledge the provision of preschool hours for every morning but I am not sure whether the way the Minister is dealing with the matter will target the children who are most in need. For that reason we oppose the section.
Question put and agreed to.
SECTION 9.
Amendments Nos. 11 and 12 are related and can be taken together by agreement. Is that agreed? Agreed.
I move amendment No. 11:
In page 12, line 22, after "benefit" to insert the following:
", including information relating to a claimant's language skills, educational attainment and length of residency in the State,".
We are opposed to this section because it appears to provide for a reduced rate of payment for social welfare allowances and jobseeker's allowance for under 20s without guaranteeing a place on a course and without providing for a full payment when the claimant does not secure a place on a course.
There are courses for everybody. There are more courses available throughout the country than ever before. We will work with the Department of Education and Science to ensure priority is given to 18 year olds and 19 year olds. We would like to see them doing courses that would lead to them getting skills that would help them to get jobs. That is what is behind the Youthreach programme. Many young people, especially those who left school early, have not completed their leaving certificate and there is a great incentive for them to do that.
On the one hand it might seem harsh that one is just cutting the payment for 18 year olds and 19 year olds but it is important to remember that it is only for new claimants. It is not as if those people have got used to receiving €204 per week and suddenly they are on €100. Getting €100 per week provides a great incentive for a young person to go and do something better for himself or herself.
Amendment, by leave, withdrawn.
I move amendment No. 12:
In page 12, between lines 36 and 37, to insert the following:
"(1C) The Minster shall, within three months of the commencement of this section, lay before the Houses of the Oireachtas the details of what is required to be furnished by persons affected by this section.".
Perhaps the Leas-Chathaoirleach will outline where we are at.
We are on section 9, amendment No. 12.
It is about profiling.
Go raibh maith agat. The amendment seeks that "The Minister shall, within three months of the commencement of this section, lay before the Houses of the Oireachtas the details of what is required to be furnished by persons affected by this section." The Minister indicated there are courses for everyone but people need to be made aware of what is available to them.
One of the first things that struck me with regard to people who make applications for social welfare is the fact that we gather very little information about them. Then we send them to FÁS, which fills in another form and gathers the information that is needed. It would be better, more efficient and in the client's best interest if they give information such as their age, education experience or work experience when they fill in the form in the first instance. It is not appropriate to list specifically in the Bill what information would be required because we need to do this in the best interests of the client. We would have that information and refer the client as quickly as possible to the jobs facilitator or whoever might be able to advise them on what is necessary for them.
This provision allows the Department to build up a better profile of the person. We already get the information on habitual residency, which is important, but the issue is how best we can use that information in the interests of the client. It is not appropriate to be specific at this stage other than to give the power to get the type of information which would facilitate targeted interventions for people and support them into training.
My concern is that there would not be duplication of courses. There should be a type of portfolio of what people have done already so they could be directed towards a course that would be most applicable to that experience. The ultimate goal would be that they would get a job at the end of the process.
That is the ultimate goal. I am trying to ensure there is no duplication and that we can finally get agencies, Departments and systems talking to each other in the interests of the individual.
Exactly.
Amendment, by leave, withdrawn.
Section 9 agreed to.
Sections 10 and 11 agreed to.
SECTION 12.
Question proposed: "That section 12 stand part of the Bill."
I oppose section 12 because it introduces extra taxes on people with low and modest incomes.
Question put and agreed to.
Sections 13 to 15, inclusive, agreed to.
SECTION 16.
I move amendment No. 13:
In page 21, line 7, after "Pensions Act 2009,” to insert the following:
"or whose liabilities are commenced to be discharged after that date".
Currently the clause is limited to schemes that are wound up after the passing of this Bill. However, we wish to have one scheme included in this, the SR Technics scheme, which was wound up three weeks ago. We ask that this amendment be accepted. It provides for companies whose liabilities are commenced to be discharged after the date. A total of 1,000 workers lost their jobs at the airport in north County Dublin recently. Their pensions are at risk and this amendment seeks to ensure they can gain from the worthwhile provisions in this Bill.
When we published the amendments yesterday, we became aware of the fact that we might be excluding some companies which had made the decision to wind up but had not discharged their liabilities. However, following an amendment I tabled yesterday, the Bill before the Seanad includes the provision Senator Hannigan seeks. The Bill now reads: "or had wound up and had not discharged any of the liabilities of the scheme at the date of the passing of the Social Welfare and Pensions Act 2009”. If a company had already made the decision to wind up but had not yet got to the stage of going to the market, for example, to purchase the annuities, it is covered, provided it is an insolvent company and there is a funding deficit.
I think that would suffice but I seek absolute clarity that the Bill as it stands will allow SR Technics to benefit from it. Is that what the Minister is saying? If so, I can withdraw the amendment.
I am not saying that. Any company which is insolvent, has a pension fund in deficit and which has already made the decision to wind up or has yet to make the decision to wind up and has not discharged any of the liabilities of the scheme as of the date of the passing of the Bill will qualify under the provision. I cannot speak about any particular company because obviously there is a process the companies must go through regarding certification and so forth relating to their insolvency.
That sounds very promising but I am concerned about the word "insolvency". The SR Technics company is not technically insolvent in the current state of play. I believe the Minister has gone a long way with this provision but I seek absolute clarity before I can withdraw the amendment.
I support Senator Hannigan. We spoke about other companies this morning such as Waterford Glass. Bord na Móna and the ESB. Their pension funds are in trouble yet they are solvent companies.
This is a specific scheme with two important criteria — an insolvent company and a pension fund in deficit. Those criteria must be met under the scheme. Where a company meets those criteria, even if it has made the decision to wind up and has not discharged its liabilities, it is covered. The Senator's amendment is already in the Bill but I cannot say whether it covers a specific company in the country. The specific criteria the company must meet are insolvency and the pension fund in deficit.
I thank the Minister. I have tabled a later amendment which deals specifically with the insolvency issue and seeks to change the wording in the Bill. I will not press this amendment but I will ask the Minister later in the debate to re-examine the issue of insolvency.
Amendment, by leave, withdrawn.
Amendment No. 15 is related to amendment No. 14. Is it agreed that amendments Nos. 14 and 15 may be discussed together? Agreed.
I move amendment No. 14:
In page 21, after line 52, to insert the following:
"(1C) The trustees shall have the power to set limits on the amount that shall be paid out based on the salary of the employee in the event of a winding up.".
This is a worthwhile amendment. Based on the annuities the trustees would have the responsibility and the power to decide on the amounts that would be paid out. This is what we discussed this morning in the context of Mr. Fingleton. The unfortunate people who have been working 30 years of their lives deserve to get a decent pension. The amendment would ensure someone would set the limit. It is about limitation.
I do not propose to accept the amendment which effectively would impose a cap on the level of benefits based on salary. This would reduce the benefits of those on higher salaries who have an expectation of a higher pension. Scheme members paid into the scheme according to the salary they were paid.
They did not expect it to be obliterated.
They paid a percentage of their salary into the scheme so they will only get benefits according to what they put into it. Where a fund is in deficit, people on the higher salaries will lose more because they had higher entitlements. It is worth noting that there are different schemes within companies whereby people of a similar salary range or status within the company have their own scheme. One often finds that the higher executives have one scheme while the ordinary workers have a different scheme. Setting the cap would not have an impact on the lower paid workers in those schemes. They are different schemes.
I must accept what the Minister says. I appreciate that she tried to arrange a briefing for me at lunchtime but I could not attend it. I could make the same point I made this morning about more time. I understand the Minister must rush the Bill through the House and acknowledge she is trying to correct the position but at the same time I do not accept what she said about limits. It is about protecting the people. The trustees should have the power and I am sorry the Minister cannot see a way to accept the amendment.
It is not possible to set a limit at this stage when people have been paying in over their working lives, albeit at a higher rate. They were paying in at a higher rate because they were on a higher salary and have an expectation of a higher benefit. I do not believe it is possible to turn around at this late stage of a person's contributions and cap that.
Amendment, by leave, withdrawn.
Section 16 agreed to.
Section 17 agreed to.
Amendment No. 15 not moved.
Section 18 agreed to.
Sections 19 to 21, inclusive, agreed to.
SECTION 22.
I move amendment No. 16:
In page 30, subsection (17)(d), line 17, after “1984” to insert the following:
"or where the liabilities of the employer exceed its assets".
This amendment returns to the issue of insolvency and the definition of insolvency. We want that widened to include the position where the liabilities of the employer exceed its assets. That is currently the case with SR Technics. It is in a position whereby it could be some years before it goes into liquidation because there are outstanding issues. It will not happen today or tomorrow and it may not even go into liquidation but it is clearly the case that its liabilities exceed its assets. I have had conversations with workers in SR Technics and am aware they appreciate the efforts the Minister and the Department have gone to recently on these issues. In recognition of that they hope she will be able to see fit to grant this change but they are asking for the specific wording to be included so that they, too, can benefit from this measure.
There are three different elements in the Bill that affect workers. The issue regarding insolvency only applies to the purchasing of what would be known in the open market as annuities, the purchasing of the PIPS, but the restructuring and the changing of the priorities will benefit a fund that is winding up, even if the company is not insolvent. Where the company is not insolvent but the pension fund is in deficit they can benefit from the restructuring elements but they will not benefit from the purchasing of the PIPS.
The purpose of all of this is to try to give as much as we possibly can to workers who have been paying into a scheme all their working lives, but this PIPS must be a scheme of last resort. It is important we do this so that we do not interfere with any state aid or competition issues. It is very confined in the companies to which it can apply and for that reason I cannot accept the amendment.
It is an area we must examine because for a company such as SR Technics this is a last resort. I am aware of people who were weeks away from retirement, having completed almost 40 years of service, and who will not get the full pension entitlement they were expecting six months ago.
The issue of purchase of annuities on an open market is something of which we must be aware. Currently, annuities are going for a very low rate and while some people's expectation in terms of their pensions was, say, an index of 100, they are now down to 50% of that. This is seriously impacting on many hundreds of workers at companies such as SR Technics.
I will have to press the amendment and I will be looking to those Members on the Government benches from the north side who know at first hand from talking to their constituents the difficulties being faced by many ex-workers who have seen their pensions being reduced significantly. If the Minister cannot see fit to include this technical change to the issue of insolvency, I will have to press this amendment.
While acknowledging the State-owned annuities, which is a welcome step forward, will PIPS be a type of bail out for employees when a company such as SR Technics is not looking after its employees, even though it is solvent, as Senator Hannigan said? Is this like a State guarantee for employees? Are we guaranteeing people's pensions?
Unfortunately, I cannot speak about any particular company but this scheme is not a bail out of pension funds. A total of 90% of defined benefit pension funds in the country are in deficit. There is no way the State can take on the liability of all of those funds but where there is the double whammy of a fund which is in deficit and a company which is insolvent, we are trying to give something back to the workers in that position.
In fairness to employers, they have made great strides in making good the gaps that have arisen in pension funds but some of those gaps are so large it would be impossible for them to do so in the short term. Where a company has run into difficulty, that fund must wind up. We are conscious of the fact that there are people who have retired who have their full rights and then workers who have been paying in all their lives who do not have those rights. These measures will at least give some extra money to those people but it is not a pension protection fund. It is not the State taking over the liabilities of every defined pension scheme in the country. It is a restructuring of the priorities, not taking from anybody, and setting up a scheme where annuities can be purchased more cheaply to give more back to the workers.
The cost of purchasing an annuity on the open market is very expensive. There is commission and profit but there is also the cost of having to have the assets to back up the cost of the pension, and none of those will fall on the State. There will be some minor administrative cost but it should reduce substantially the cost of the actual annuity on the open market, and that can go straight back to the worker. It is not possible, however, for the State to take over the liability of all the defined pension schemes. If Senator Hannigan's amendment was simply a technical one, as he said, it might be feasible to do that but it is not because it opens it up to every scheme in the country. I am sure we would also be liable under state aid and competition rules were we to do that.
I appreciate to an extent what the Minister is saying but there may be some way to accommodate my amendment without opening it up to a wider base. I have tabled two amendments and either one of them would have allowed SR Technics to be part of the scheme. If she will give a commitment to introduce a change on Report Stage that would specifically allow for this company to be part of it, I would be happy to withdraw the amendment but failing that, I will have to press it.
I cannot give a commitment to put into legislation something that benefits just one company. That would not be possible. It would have an enormous knock-on effect for other companies. It may even be illegal to put something into legislation which is for the benefit of one company.
I am sure the Minister could find a wording.
I regret I cannot give that commitment because the liability that would fall on the State would be far greater than any of us would be able to meet.
At this stage never the twain shall meet. I appreciate the Minister's time but——
Is the amendment being pressed?
Amendment put.
The Committee divided: Tá, 16; Níl, 28.
Tá
- Bradford, Paul.
- Burke, Paddy.
- Buttimer, Jerry.
- Cannon, Ciaran.
- Coffey, Paudie.
- Coghlan, Paul.
- Cummins, Maurice.
- Fitzgerald, Frances.
- Hannigan, Dominic.
- Healy Eames, Fidelma.
- McFadden, Nicky.
- Phelan, John Paul.
- Prendergast, Phil.
- Regan, Eugene.
- Ryan, Brendan.
- Twomey, Liam.
Níl
- Boyle, Dan.
- Brady, Martin.
- Butler, Larry.
- Callanan, Peter.
- Callely, Ivor.
- Carty, John.
- Cassidy, Donie.
- Corrigan, Maria.
- Daly, Mark.
- de Búrca, Déirdre.
- Feeney, Geraldine.
- Glynn, Camillus.
- Hanafin, John.
- MacSharry, Marc.
- McDonald, Lisa.
- Ó Domhnaill, Brian.
- Ó Murchú, Labhrás.
- O’Brien, Francis.
- O’Donovan, Denis.
- O’Malley, Fiona.
- O’Sullivan, Ned.
- Ormonde, Ann.
- Phelan, Kieran.
- Quinn, Feargal.
- Ross, Shane.
- Walsh, Jim.
- White, Mary M.
- Wilson, Diarmuid.
Tellers: Tá, Senators Dominic Hannigan and Phil Prendergast; Níl, Senators Diarmuid Wilson and Camillus Glynn.
Amendment declared lost.
Question proposed: "That section 22 stand part of the Bill."
I want clarification on some of the provisions of the pensions insolvency payment scheme. The Minister may not even know me but I am a Senator from County Waterford. I am aware she spoke in the other House about the Waterford Crystal workers' pension scheme, which has taken a big hit. There is serious concern in Waterford that for the workers who have contributed for up to 40 years to the scheme there will be nothing left of it as the company goes into liquidation. Many of the families affected will be knocking on the Minister's door for assistance. I am sure the Minister's party colleagues have informed her about how the pension contributions in Waterford Crystal have been wasted away. There is much concern in Waterford and the region about the workers' pension entitlements.
Over the years Waterford Crystal workers contributed not only to Waterford but to the national economy, building up the company name as an international brand. If these provisions for the pensions insolvency payment scheme were in place one year ago when Waterford Crystal was solvent, would it have made any difference to the workers' pension entitlements? The workers affected and their families are interested in the answer to that question.
I support Senator Coffey in raising this matter. We have the awful debacle in Waterford where people with 40 or more years' service with Waterford Crystal, who paid their taxes and their pension contributions have found there is little or nothing in their pensions. People who were expecting to have a reasonable pension have been forced to apply for social welfare pensions. It is of paramount importance that the Minister clarifies whether this section will be of any benefit to the Waterford Crystal workers. I do not believe it will be but it is a step in the right direction. Many of the workers have been with the company for over 40 years. I know of two workers who began there at 14 years of age but whose first three years are not counted in their redundancy payments. This is another smack in the face to the workers.
The people of Waterford are angry that the Waterford Crystal factory, which gave good employment to them through generations, was let go the way it was by the Government. It is an absolute disgrace. Guinness and Waterford Crystal are two iconic national brands. Would the same happen if Guinness were to shut down? It is a shame the Government has allowed Waterford Crystal to be sold off to venture capitalists and the workers treated in such a manner. The brand means much, not alone to the people of Waterford but the south east and the country. Manufacturing at Waterford Crystal should have been supported by the Government.
Will the Minister do all she can to ensure the Waterford Crystal workers are assisted with their pension entitlements and that their redundancy payments are calculated properly? With the forthcoming elections, I have found on the doorsteps that former Waterford Crystal workers are so angry about this matter that they do not want to talk to any politician. There is a need for clarification of their entitlements. There is also a need for a task force to examine this matter. However, with unemployment predicted to reach 600,000 by next year we may need a task force for the entire country. Waterford has been hit worse than many other cities. Will the Minister outline whether the pensions insolvency payment scheme will assist Waterford Crystal workers and, if not, will she explain why?
I have sympathy for those in private pension funds who now find they are unlikely to get a full pension, or in many instances no pension, because of the investment failures that have occurred in the past year and a half. However, I cannot see how the Government can be expected to step in. Even if the Government were of a mind to address these issues, the resources are simply not there. Concern has been expressed about pension schemes in some third level institutions, with calls to take over funds and for the State to meet their liabilities. The pensions area is extremely complex. On Second Stage, I complimented the Minister on being the first to take certain measures, such as this Bill's provisions, which will be beneficial in this area.
Many private pensions, be they defined contribution or defined benefit schemes, have trustees who in most instances have been nominated by an employer. It may be necessary to examine the legislation to ascertain whether employees or their unions could also have nominees appointed as trustees. In so far as that right would be given to them, it would be essential that the person nominated would have the expertise and knowledge to make a sensible and constructive contribution at that level. However, there might be a need to consider the balance between employers nominating people and trustees, who have legislative responsibilities to deal with this issue. It is a complex area, as the Minister told us earlier. We must be careful in the way we propose to tackle it. To be fair, across the House we should recognise that the steps the Minister has taken are positive for the people involved. They will not and cannot meet the full shortfall in funds that exists but it is a small step in the right direction and sets a foundation for doing more.
When the Bill is passed, will it be the case that the workers at Waterford Crystal will still not have their pensions but that workers in the ESB, where there is also a big shortfall in the pension fund, will be covered under the scheme?
The Minister stated that there could be more than one pension scheme within a company, one for the higher end or management level and the other for the ordinary workers. Could there be a situation where a company would let the ordinary workers' pension scheme go and not fund it properly and, at the same time, have a well funded scheme for the management? There might be trustees in both of the schemes but the situation could arise within one company where the management level scheme would survive while the ordinary workers' scheme would not survive.
The trustees are nominated by both the employers and the unions, and all trustee boards allow for members of the schemes to be selected. The unions normally hold elections for their members of the board and pensioners are also normally represented. The issue raised by Senator Walsh is covered.
With regard to the timing of the Bill and what companies it may or may not have affected a year ago, the pension funds have suffered as part of the global financial crisis because private pension funds are, after all, investment funds. Where the value of the stocks and shares have collapsed, so too have the values of those pension funds. This has happened over the past year and has meant that 90% of defined benefit pension schemes are in deficit. However, this is as a result of the global market rather than anything legislation could have done.
The situation in Waterford Crystal is a particularly difficult one for the workers. We were all very sad to see the company go because it is an iconic brand, it has a well recognised national and international name and it has provided great employment to the people of Waterford over the years. The Waterford Crystal company is insolvent and its pension fund is in deficit. There are two criteria that must be met if a company is to be allowed to participate in the State annuity scheme, namely, that the company must be insolvent and the fund must be in deficit. Even if the fund has already taken a decision to wind up but the company has not discharged its liabilities, then, subject to the criteria being satisfied, it will qualify under this legislation. The two strict criteria are an insolvent company and a fund which is in deficit.
With regard to changing the priorities, which will affect some companies, this does not require the company to be insolvent. It just requires the company to be either restructuring its fund or winding up its fund. Different elements apply in this event.
With regard to the question of whether the trustees can act for one scheme and not for the other, the answer is "no", they must work for the benefit of all scheme members. Any changes must be brought about by negotiations and the Bill provides that a company must indicate if it is considering restructuring and changing the priorities. The Pensions Board is the body that will approve of any restructuring. In the first instance, therefore, if a company wants to restructure or if a company is insolvent and wants to go down any part of this road, it goes to the Pensions Board to sign off on that.
I am still not clear whether the workers will be covered. From the best information to hand, the company is insolvent and there is then the question of its funds being in large deficit. If, from what the Minister said, the company comes under the legislation, what type of benefit will accrue to the workers? Will they get their full pensions? That is the bottom line for the workers in Waterford Crystal. They want some certainty at this point of uncertainty in their lives so they will know exactly what they will get from the pensions into which they have paid for up to 40 years. The Minister should clarify the situation. Will they get their full pension based on the company being insolvent and the pension fund being in deficit?
I thank the Minister for outlining the criteria under which companies will qualify under this section of the pensions scheme. I too would like clarification, specifically with regard to Waterford Crystal workers who have contributed not only to Waterford city and its environs but to the country in tax receipts over many years. I am sure the Minister is aware that only one year before the company went into receivership, some directors retired from the company and took over €1 million in pension entitlements. While it is a private pension fund, it is a kick in the face to those workers to see directors walking away with that amount of pension when the workers see their pensions wasted away. I would like the Minister to consider that fact, particularly when we see some of those directors subsequently being appointed to State boards, with further incomes.
In the present climate, pension entitlements and what happens to pensions is an area that needs Government focus. While I accept the Minister is giving this matter her attention, it would be welcome if she would deal with the questions from Senator Cummins and me with regard to the Waterford Crystal workers.
I join fellow Senators in asking for specific examples of certain companies which will be helped. Senator Coffey referred to Waterford Crystal and I would be interested to hear the Minster's response. I also ask what succour she can give to the 1,000 past employees of SR Technics who recently lost their jobs in north Dublin. Will she clarify exactly how they will benefit from the Bill with regard to their pensions?
A pension fund which is in deficit and which it is intended will be restructured or wound up can benefit from the changing of the priorities which we have put into the legislation. That will ensure that the rate of payment of current pensioners is protected but the increases they will be due to get will receive a lower priority than the entitlements of the workers, so the workers will gain some additional money from that.
On a separate issue, where the pension fund is in deficit and where the company is insolvent, workers can benefit from the purchasing of the pension insolvency payment scheme, PIPS, but those two criteria must be met. What does this mean for a company? It does not mean that the full pension is guaranteed because the pension fund is the amount of money contained in the fund. If an insolvent company satisfies the criteria and has its pension fund in deficit, it will only give to the State the amount of money which the State deems it will cost to provide a pension for that pensioner for the rest of his or her life. Whatever savings are made in giving it to the State rather than giving it to a private company will go back into the fund so they are then available to be disbursed among the remaining workers.
The cost of the scheme will depend on each individual pension fund and scheme. It will depend on the age profile, the interest rate used, the actuarial advice and so on. There is no blanket scheme that will apply to all. It will depend on each individual fund. However, workers can benefit. The amount to which they will benefit will depend on their own individual fund, but this is not a pension protection fund. It does not guarantee that the money that workers have paid in throughout their lifetimes will come back to them in their pension. However, it will give them a bit more than they would have got if we did not have the legislation.
I thank the Minister. When a company's pension scheme gets into some bother, will the national assets management agency take it over and run it after that? Regarding the banks, Anglo Irish Bank has been nationalised by the Government. Down the road when property values increase the Government would hope to make money out of it. In this case with the pensions, will the national assets management agency now be buying pensions with units with a very low value? I assume that the collapse in the pension scheme means the investment the brokerages have made have collapsed and that the units are very cheap. The national assets management agency is probably buying units that have collapsed in value and are very cheap at the moment. Down the road is it possible that the national assets management agency will realise a large increase in the value of those pensions or does it mean that the taxpayer must take the full hit where it takes over a company's pension scheme to pay the workers? Will there be any possibility that down the road the pension that the national assets management agency will take over and manage might come back to the level the company had initially envisaged for the employees who took out the pensions?
I thank the Minister for trying to explain it. I am especially interested in the situation of the workers in Waterford Crystal. If I am to go back to those workers and recite what the Minister has just told the House, they would be probably just as confused as they were beforehand. There is still no degree of certainty regarding what they will get. Admittedly every person will be different. Many people have worked there for 30 years. Surely after 30 years of contributions there should be some kind of certainty on what they will get from the scheme. Will they get another 20% or 30%? The Minister has said they will not get it all, which obviously they will not. However, there should be some degree of certainty. A considerable amount of work must have gone into this at the time when Waterford Crystal sought Government aid. These types of matters must have been considered at that point. People have been working there for 30 years on average. Surely there should be some certainty. The Minister should be able to tell me what percentage of their pension they will get based on what they have contributed over 30 years.
Can any degree of certainty be gleaned from the section? If there is nothing for them, let us tell them that. The last thing people want is to be led up the garden path and be told they will get more money in their pension and then not get it. We need to be straight with these people. As it stands their dignity is on the ground. These are people who have been skilled craftsmen for many years and now find they cannot educate their children and their future seems gone. They are devastated. We need some certainty at this point. We do not need to hear that they might get something. Let us spell out exactly what they will get based on an average of 30 years' employment in the factory. We need to be able to go back with some certainty and tell the people what they will get and let them know they will be somewhat better off than they were. I would ask the Minister to do that if she can do so. If she does not have that information on Committee Stage, perhaps we could have it on Report Stage. We want to have some certainty that we can bring to the people and let them know their entitlements and what they will get as a result of this.
I do not hold and will not hold the details of each individual scheme and what each individual pensioner or prospective pensioner or worker is entitled to within that scheme. This provision will allow a company that is insolvent with a fund in deficit to purchase from the State. Rather than purchasing from a private company it will be able to add on some percentage to the value of the pension available to the existing worker. Whatever people have been told they are getting in light of the size of the fund, this will add some percentage on top of that. It is a saving for them. In any of the funds that are in deficit it does not guarantee the full pension that people thought they would get because the pension fund itself is in difficulty because the value of that fund has declined.
The State is not taking over the pension fund of any company in doing this. The State is setting up the new scheme to operate as follows. Trustees, who are winding up a fund and need to make provision to pay existing pensioners and also ensure they have money to go back in to provide for a product for the existing workers, should go to the open market. Once they establish what it would cost to provide pensions for their existing pensioners, they can then go to the State and see which one gives the better offer. I have no doubt the State one will give a much cheaper option to the trustees because we will not be taking the commission or profit and will not need all the capital assets to back it up, etc. It will be cheaper for the trustees to buy the product and the State will then pay the pension. However, it will only take from the trustees the amount required to pay the pensions for those existing pensioners. The trustees of the company then have whatever savings remain to put back in for the workers.
It is not NAMA that will take control of this; it is the National Treasury Management Agency. However, we are not taking over the entire fund, the assets and everything that goes with it. It is like selling a product at a better deal to the trustees than they would get on the open market so that they can save money to give to the workers.
The Minister has clarified that the State will not be taking over the fund but will be taking over what the people will be due. Am I correct in that? Is the Minister saying the State is not taking over the pension but what the individuals' entitlement will be which can be invested to get their pension?
The Minister mentioned a pension guarantee fund. It is easy to be wise after the event. However, there was a similar situation in the UK where there was no pension guarantee fund as is laid down in EU legislation. The British Government was found to be in breach of that directive and was advised that it needed to have a pension guarantee scheme in place. I have no doubt the unions and the people involved in Waterford Crystal will eventually take the Government to the European Court for not having a pension guarantee system in place. If that guarantee had been in place people would not be in the situation they now find themselves. I accept it would have been a greater risk for the Government. However, all other governments across Europe have undertaken such a pension guarantee scheme.
Like our counterparts in the UK, we did not, but they will now have to cough up because they have been found to be in breach of EU legislation. There is no question that the same will happen to the Irish Government. Although the time will probably not come for several years, we will have to face the issue eventually. People are prepared to eke out an existence on social welfare for three or four years but they still want their entitlements. The pension guarantee scheme should have been put in place and I do not doubt that the decision will favour the workers when it is eventually made by Europe. This is the case not only for Waterford but also for the workers in SR Technics and other companies who have seen their pensions dissolve before their eyes.
Despite listening closely to the Minister's contribution, I remain mystified as to how the scheme will operate. I commend her on trying to make this work but I fail to understand many aspects of it. If, for example, a company becomes insolvent, the Minister suggested that it will purchase a product from the NTMA. However, its insolvency means that it will have no money other than its pension funds. Will it sell its remaining assets to the NTMA? An insolvent company may still own reserves after selling its properties or when the liquidators are put in place. Will the pension fund have first call on these reserves before banks or the Revenue Commissioners? The Minister's intention is to build up pensions for the people who encounter these problems. As Senator Coffey noted, some of the directors of Waterford Crystal walked away with millions of euro whereas ordinary workers who paid into the pension fund for years receive nothing. It is a terrible situation and I feel very sorry for those workers.
I commend the Minister on attempting to ensure that people will not face the same problems in the future but I am unclear how her proposals will work in practice. If I cannot fully comprehend the scheme, I am sure the public will not understand it until they face the same situation as the workers in Waterford.
The UK's pension protection fund has incurred enormous liabilities. Approximately 90% of defined benefit pension funds in Ireland are in deficit, possibly to the tune of €30 billion. There is no possibility that the State can take on that liability. Through this legislation we are trying to give some comfort to workers regarding funds which are restructured or wound up, particularly in respect of insolvent companies.
I can see why Senators find these issues difficult to understand. Pension legislation is the most complex area of public policy. When a scheme in deficit is wound up, the pensions of retired members must be paid in full before any money is given to those who have not yet retired. Protecting existing pensioners is sacrosanct but if the pension fund is being wound up it can no longer be in a position to pay their pensions. The normal course of action in such an event is to purchase an annuity from a life assurance company which would give the pensioner a guaranteed regular income for life. Instead of trustees dealing with private companies and paying the associated fees and commissions, they will now have the option of asking the Exchequer how much it will charge. The savings they make give them more money to spend on the pensions of existing workers.
The Minister stated that the pensions of existing retirees are sacrosanct. They will have to approach either a life assurance company or the State to get the best possible deal on their pensions. Some workers who received part of their redundancy payments last year agreed to requests from their employers to defer the remainder until this year. They have borrowed money in expectation of these payments but now they find they cannot meet the loan repayments.
I still cannot explain to a former employee of Waterford Crystal what he or she will get as a result of this provision because it does not offer certainty. The union will have to enter detailed discussions with trustees and life assurance companies to provide clarity. I had hoped to receive clarity today because, as the Minister noted, this is a confusing matter. If it is difficult for us to comprehend it, how will it be for the workers on the ground?
If a pension fund wishes to purchase annuities on the open market, the cost at present is in the order of 3.5%, although I would not like to sign my life away on that figure. This scheme would allow the Government to offer a higher rate by means of a bond issuance. The Government is trying to arrange funding for this year's €20 billion budget deficit.
If a deal could be done to attract more money into purchasing annuities from the State as opposed to from the open market, it would be a win-win situation. I am surprised we are not trying to make allowances for pensioners who have lost heavily due to the fall in the annuities market. Extending the scheme would allow the Government to borrow funds at a slightly lower rate than would have otherwise been the case. The half way mark between the cost of an annuity on the open market and the cost of Government borrowing would give pensioners a higher rate of annual payment.
Putting questions on the Waterford Crystal scheme to the Minister in the course of a debate on this Bill was unfair. I have the height of sympathy for people from my county of Wexford who work for Waterford Crystal. The Minister is doing her utmost by introducing this legislation, the workings of which she has explained clearly approximately five times. However, actuarial advice on each worker's case is not available. Like Senator Cummins, I have been asked these questions, but it is not possible to give individual answers. Therefore, the Minister has responded to the best of her abilities. Senator Cummins was being unfair in ambushing her.
He did.
That is uncalled for.
It is not possible for any Minister to attend the House and comment——
This is the time to ask questions.
May I speak, please?
Senator McDonald without interruption.
It is not possible for anyone to attend the House and comment on an individual scheme, which I know from my private family law work as a practising solicitor. Pensions are a complex matter and it is difficult to give the answers right now. Since people would need to sit down and work out the exact figures, the Senator is being unfair.
I am not. I have not addressed the matter in a confrontational way. The people who approach me are seeking answers and I do not accept that none can be provided today. The Minister is in the job and should know the situation. On behalf of Waterford Crystal's workers, the unions sat down with the Government to discuss these points prior to the national pay talks. As the Minister and her Department should know the exact position, there is no point in the other side lecturing us and telling us it is unfair to ask the Minister questions, which she appeared to answer.
Unreasonable.
They are not unreasonable where the people of Waterford Crystal and SR Technics are concerned.
This is a social welfare Bill.
Those people, including senior craftsmen who never wanted to be on the dole, are in receipt of social welfare payments only. They wanted their pension entitlements, which they had paid for all of their lives. I am not being unreasonable in asking for answers. I reject that suggestion. The workers of Waterford Crystal, SR Technics and many other companies are not unreasonable in asking for their rights. I make no apologies in asking these questions on behalf of workers.
Hear, hear.
I understand where Senator McDonald is coming from. With due respect, were we to raise such an issue on the Order of Business and ask the Leader to arrange a debate, he would tell us he would do so or that we could discuss it under a certain Bill. This is the Bill under which to discuss workers' pension entitlements. We are elected representatives and I take exception to Senator McDonald stating we cannot speak out or ask relevant questions on behalf of citizens. It is what we will do.
In fairness to the Minister, she has explained this section as well as is possible. We do not need the Senator to lecture us from her side of the House.
Clearly the Opposition does. It has asked the question again. It has been answered.
Section 22, the Minister to reply.
We are entitled to ask questions on behalf of workers who, for the past four decades, have contributed to the State considerably. Senator McDonald mentioned that some of them were in her constituency. Perhaps she should start speaking out at her parliamentary party's meetings on their behalf because we have not heard a tweet out of her in the past six months or year.
That is not relevant. Did Senator McDonald wish to speak on section 22?
I want to respond to that attack on my character.
No, we are on section 22.
On that section, the question has been answered. Repeating it three or four times is unreasonable, since an answer to the specific question cannot be given at this time. Therefore, asking it is a waste of time.
That is the Senator's opinion.
Yes. I am entitled to voice it——
She is.
——ten times like Senator Cummins.
The Minister to reply.
Senator McDonald is not representing her constituents in New Ross and elsewhere well.
Let that be a matter for my constituents.
She is not doing them any justice. No one other than her has been confrontational.
Senator Cummins has been. I just pulled him up on it.
The Minister will reply to the questions raised.
I can appreciate that all Senators are concerned about the deficit in pension funds, particularly where the companies are insolvent. The people involved are being affected doubly, in that they have lost their jobs and watched the value of their pensions decline drastically.
Suffice it to say, the Bill's measures in respect of qualifying companies will ensure the workers gain an additional percentage. It will be different from worker to worker and from scheme to scheme. For those who qualify, there will be something extra, which is what the legislation is trying to ensure.
The Minister mentioned that the exposure could be approximately €30 billion and that the State could not take on the full liability. Under this legislation, what would be the exposure to the State?
It is cost neutral to the taxpayer.
As the Minister stated on Second Stage.
Question put and declared carried.
Section 23 agreed to.
Question put: "That the Title be the Title to the Bill."
The Committee divided: Tá, 27; Níl, 19.
Tá
- Boyle, Dan.
- Brady, Martin.
- Butler, Larry.
- Callanan, Peter.
- Callely, Ivor.
- Carty, John.
- Cassidy, Donie.
- Corrigan, Maria.
- Daly, Mark.
- de Búrca, Déirdre.
- Ellis, John.
- Feeney, Geraldine.
- Glynn, Camillus.
- Hanafin, John.
- MacSharry, Marc.
- McDonald, Lisa.
- Ó Domhnaill, Brian.
- Ó Murchú, Labhrás.
- O’Brien, Francis.
- O’Donovan, Denis.
- O’Malley, Fiona.
- O’Sullivan, Ned.
- Ormonde, Ann.
- Phelan, Kieran.
- Walsh, Jim.
- White, Mary M.
- Wilson, Diarmuid.
Níl
- Burke, Paddy.
- Buttimer, Jerry.
- Cannon, Ciaran.
- Coffey, Paudie.
- Coghlan, Paul.
- Cummins, Maurice.
- Donohoe, Paschal.
- Fitzgerald, Frances.
- Hannigan, Dominic.
- Healy Eames, Fidelma.
- McFadden, Nicky.
- O’Toole, Joe.
- Phelan, John Paul.
- Prendergast, Phil.
- Quinn, Feargal.
- Ross, Shane.
- Ryan, Brendan.
- Twomey, Liam.
- White, Alex.
Tellers: Tá, Senators Camillus Glynn and Diarmuid Wilson; Níl, Senators Maurice Cummins and Nicky McFadden.
Question declared carried.
Bill reported without amendments.
When is it proposed to take the next Stage?
Is that agreed?
No, we want a break between Committee Stage and Report Stage. It is not acceptable to go from Committee Stage to Report Stage. We have amendments to make.
I thank the Cathaoirleach for his indulgence. Amendments have been submitted.
Further amendments will be submitted but we have not had a chance to do so because we have just finished Committee Stage. We require a break.
I asked when the next Stage would be taken and the Leader said it would be now.
On a point of order, it is not acceptable to submit an amendment for the Fourth Stage while the Third Stage is still in progress. That has always been the convention. What is proposed is not an acceptable legislative process. There must be time to submit amendments. The Cathaoirleach's advisers will tell him that even during Second Stage they are reluctant to accept amendments for Committee Stage. It is not an acceptable practice.
Is the Leader trying to force through the Social Welfare and Pensions Bill without time to submit amendments for Report Stage or a break in proceedings between Committee Stage and Report Stage? He prides himself on never guillotining legislation. Is he trying to push through this important legislation?
The Leader told us he would not guillotine any more Bills. Was he misleading the House? He made that point three months ago.
My understanding was that Report Stage would take place at the conclusion of Private Members' business.
We propose to have Private Members' business between 5 p.m. and 7 p.m. We will do anything we can do to assist colleagues with amendments. Colleagues will be allowed the fullest opportunity to make their points.
The Leader is trying to do the opposite.
My understanding was that Report Stage would take place at the conclusion of Private Members' business. Is that agreed? Agreed.
The Cathaoirleach's understanding was correct.