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Dáil Éireann debate -
Thursday, 31 May 1990

Vol. 399 No. 5

Pensions Bill, 1990: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

I might remind the Minister of some of The Workers' Party reservations with what we perceive to be the inadequacies of this Bill. For example, with regard to trustees, the provisions of section 34 enable the trustees of an occupational pensions scheme to transfer payments without the consent of a member. This provision confuses me somewhat. Would the Minister explain what circumstances he envisages could give rise to such action or why a member's consent would not be sought in the first place? For example, the National Pensions Board did not recommend that trustees should have power to effect transfers rather than preserve benefits without the members concerned being approached.

Many employees and some employers have abused pensions schemes and negotiated their terms for short-term financial gain. Employers have often deployed the provisons of a pensions scheme as a means of enticing workers to leave their employment, usually by boosting redundancy payments as an incentive to workers to leave their employment by way of deals negotiated in respect of redundancy. We must recognise that that is not the main purpose of a pensions scheme — they are not intended to be savings schemes for employees or lump sums that can be negotiated when some employees are made redundant. In addition, some employees have used their pensions scheme membership to negotiate a short-term savings scheme, yielding a lump sum, rather than its being used as a long-term provision designed to yield pensions and other benefits on death or retirement.

The provisions of this Bill improve that position somewhat. I should like the Minister to address the matter as it pertains to a country like ours, suffering so much from emigration and long-term unemployment. What facility would exist for emigrants making a claim under this Bill? While it is accepted that the object of pension schemes is primarily to accrue a pension, in many cases the viability of schemes is often dependent on a properly constructed long-term investment plan of a member's contributions. Can the Minister envisage any case for workers seeking refunds of their contributions, for example, where they are relatively new, short-term members of the scheme who wish to emigrate or where the worker is relatively young and, through ill health or other factors, may never be employed again?

As this debate continues, it will be brought to our attention that a number of established procedures will be shaken — for example, the rights of individuals on leaving their employment to cash in their savings through the pension scheme. Obviously many workers would be anxious to retain this right if they should lose their jobs, if they leave to seek employment elsewhere or if they wish to emigrate. These people might wish to capitalise on the savings already accruing on their behalf.

I accept that pensions schemes are not savings schemes but I would like the Minister to address on Committee Stage the opportunities for access by workers to the money in the pension schemes to which they have made an input. I have in mind particularly relatively young people who would not be very long in the pension scheme and where the sum of money would not be great. It is hard to tell a young worker who has served five or six years in an industry and who wishes to emigrate that his pension will be there for him at the age of 60 or 65 if he should return from the United States, Canada or South Africa. In many cases people regard their pension as a lump sum to be used when they wish to emigrate or if they become unemployed and have mortgages. Many of these people consider this sum as being relatively large but in the context of the overall pension scheme it is relatively insignificant. There are great pressures on these individuals to get the lump sum, which has been the tradition to date. It will be very difficult for people to recognise that this practice is on the way out. I would ask the Minister to consider providing facilities for people to cash in their savings in the pensions scheme.

Under the qualifying service section, the Minister has provided that a person must have five years service before he can qualify for preservation and that two of these years must fall after the commencement date of this legislation. However, the National Pensions Board recommended that five years service be required of members under 25 years at the time of leaving and that this be reduced by one year for each year over that age, subject to a minimum of two years qualifying service. This would make a significant difference for anyone over the age of 25 years. Perhaps the Minister would address this question on Committee Stage. As I said the last day, I am working mainly from the recommendations of the National Pensions Board which, in many cases, are preferable to the watered down provisions incorporated in the Bill.

It is regrettable that the preservation and revaluation provisions will not apply from a current date to entitlements arising from service prior to this legislation becoming effective. The National Pensions Board suggested a short lead-in period for the change, with no attempt at retrospection. The Bill lays down a much longer lead-in period which is inappropriate and unacceptable. The original formula of the National Pensions Board should be used. The majority of pensions schemes are financially healthy and it would cause no problems if we were to allow for a shorter lead-in period.

The section dealing with equal treatment is a major disappointment because it provides for only the minimum requirements of the European Community Directive on equal treatment in occupational schemes. The main weaknesses are in the areas of exemptions and enforcement. The Bill fails to achieve progress in its approach to the removal of discrimination between men and women. Comprehensive recommendations made in the latest report of the National Pensions Board have been ignored. The Minister, for his own reasons, has decided to make changes that barely comply with the EC Directive on equal treatment. One of the major debates on this Bill will centre around the whole question of equal treatment for men and women.

This Bill shows all the hallmarks of being substantially watered down by lobbying and pressure, not just from the pensions industry but from employer interests. Pensions schemes can continue to impose different pension ages for men and women, widowers will not have to be provided for on the same basis as widows and different benefits can be provided for men and women. This may be justified on actuarial grounds, for example, that women live longer than men or that one sex suffers more illnesses than the other.

I will comment on specific sections of the Bill. In regard to the actuarial factor, section 67 (1) (a) allows different contribution levels for male and female members of pensions schemes, to the extent that the difference is justified on actuarial grounds — this must be repealed by 30 July 1999 but it was the view of the National Pensions Board and the Irish Congress of Trade Unions that such an exemption should not be availed of. In practice, few if any pension schemes in Ireland require members to pay different contributions because of their sex.

Section 67 (1) (c) allows for different retirement ages for men and women. This exemption was seen as unnecessary in view of the widespread harmonisation of pension ages in this country and the fact that social welfare pensions are paid already to both men and women at the same age. Section 67 (1) (e) allows different treatment for a deceased member's surviving spouse or other dependants. This is unacceptable in view of the fact that such differences are already seen as being unwarranted and are being removed in certain areas. The Minister has produced a Bill that not only flies in the face of the recommendations of the Government-appointed National Pensions Board, but proposes to allow differences in contribution levels between men and women to remain up until 1999, provided they are based on actuarial data. I would argue that each of these exclusions is in conflict with the broad principle of non-discrimination laid down in Article 119 of the Treaty of Rome and runs the risk of being challenged under this Article.

We wish to see further debate in these areas as the Bill progresses. In the light of our reservations, the Minister will be aware that we will be bringing forward amendments on Committee Stage to strengthen the Bill. However, I would have to agree that the Pensions Bill, 1990 is welcome and is long overdue. The Bill implements many important recommendations of the National Pensions Board and indeed satisfies several longstanding trade union demands in the area of pension reform. However, it was disappointing in certain respects, particularly with regard to member trusteeships and equal treatment for men and women. During my previous contribution I went into detail on the member trusteeship so I will not repeat myself.

I will summarise now what The Workers' Party see as the main weaknesses of the Bill. First, there is a very low trade union representation on the proposed new pensions board. Seven out of the eight members will represent employers, the pension professionals and the ministerial nominees. Second, very low fines will be imposed for pensions offences and we believe these will not act as a serious deterrent for serious offenders. Third, the question of preserving pensions will apply only to benefit built up after the time the legislation becomes effective and after the person has five years qualifying service in the scheme. We think this weakness should be corrected and it does not conform with the recommendations of the National Pensions Board. We are concerned also that contributions refunds, where still payable, will not attract interest. We also note the registration of pension schemes will not be linked to the actuarial certificates submitted to the new pensions board and will, therefore, not necessarily facilitate approved supervision of schemes.

We are also concerned that self-investment and the concentration of investment are not restricted even for the purpose of certifying minimum funding standards. We have reservations about the precise disclosure arrangements which will be governed by regulation. The Minister has the power to restrict the categories of persons who receive information, the amount of information provided and whether it is supplied automatically or on request. Some schemes may also be exempted from disclosure requirements on the grounds of size.

The member trusteeship as recommended by a substantial majority of the National Pensions Board has not been introduced. The equal treatment directive has been implemented in a minimalist manner with all possible exemptions and exclusions being availed of, in particular, different retirement ages. Different benefits for survivors and even different member's contributions levels are permitted which are contrary to the recommendations of the National Pensions Board. All pension disputes concerning equal treatment for men and women are to be dealt with by the pensions board in future rather than by the existing equality enforcement machinery, such as equality officers and the Labour Court as heretofore. This will be further removed from the normal industrial relations arena and I argue that quite possibly it will have adverse consequences. There is no provision for compensation, except in dismissal cases, where employers are found guilty of, and employees have suffered from sex discrimination in regard to pensions.

They are the litany of points that we would like the Minister to address before the Bill comes back on Committee Stage. I look forward to the continuing debate.

This most welcome Bill brings together the first and fourth reports of the National Pensions Board, which was established in 1986 to review the operation and regulation of occupational pension schemes. The first report provides the body of recommendations reflected in this Bill. The fourth report deals with the equal treatment of men and women in occupational pension schemes, the subject of EC Directive 86/378.

The Bill contains very significant provisions aimed at regulating occupational pension schemes and protecting the interest of scheme members through the implementation of standards and procedures by all such schemes. On reading the explanatory memorandum to the Bill I found that its purposes and main provisions are quite clear and understandable, although the Bill necessarily contains much technical detail relating to the operation of such schemes, the logic of which is found in the deliberations and report of the National Pensions Board. I recognise, therefore, it is the product of a board which included representatives from Government, trade unions, employers and the self-employed, and the professionals within the pensions industry. I understand also that a total of 19 further submissions were sent to the Minister following the publication of the report.

Far from being a watered down exercise, as Deputy Byrne has suggested, this Bill is a model of the democratic procedure with which this House can feel very comfortable and satisfied. I congratulate the Minister and all those who contributed to bringing this Bill before the House. However, if we can be critical of anything, it must be the length of time that passes before such important areas of law affecting so many people are reviewed or streamlined. In this case we have the Trustee Act, 1893, comprising the main body of statute law in regard to pension schemes but which was not drafted with pension schemes in mind. That is a deficiency of our statute review system and therefore I am very pleased to see that this Bill provides for the establishment of a permanent pensions board which will, inter alia, monitor the general area of pension schemes and advise the Minister on the matter. Within such a framework we can ensure that there are ongoing and efficient reviews of all pertinent legislative and procedural issues. It is particularly important, and indeed a comfort to this House, that in such an important Bill as this, which contains many technical provisions, there is a facility to ensure compliance and review and a body through which the views and representations of individuals, associations and other bodies can be properly channelled and efficiently received.

Section 10 details the precise functions of the board. While I believe they are quite comprehensive I wonder whether the Minister would consider establishing an advisory or public information office also. I know there are provisions for the dissemination of information by trustees, but as we all know, bureaucratic or other reasons can often hinder or embarrass people when establishing their rights or entitlements. A third party or public information bureau could provide a very useful service in this field and would at the same time give the board some indication of the types and extent of problems which might arise for the ordinary member. It is possible that the Minister intends to provide this type of service and at this stage I would ask him to comment on it.

In section 16, which also deals with the staff of the board, there are no provisions relating to the transfer of staff from Government Departments or other agencies, therefore, I presume all the staff will be recruited by the board. I would be glad if the Minister could give me some indication of the likely employment arising from the establishment of the board and where it is intended the offices will be located.

Section 21 deals with the disclosure by members of the board of any interest in proposed contracts. It is correct that provision should be made to ensure that such disclosures take place. As this will not be a private company, the provisions of company law will not apply where such disclosures do not take place. In that case, the Minister does not provide a remedy for any failure on the part of board members to disclose such interest. I understand that because of the essentially representational nature of the eight ordinary members of the board, as provided for in the First Schedule, the Minister may have some sensitivities in this area. However, it would be in the Minister's interest to provide some form of remedy for himself should difficulties arise in regard to this delicate area.

Regarding Part II, I would like to offer a general warm welcome to the proposal to create the pensions board which I believe will be seen as a most positive and beneficial proposal by the Minister.

Part III of the Bill concerns the preservation of benefits. Like most Deputies I was amazed at the Minister's recent statement to the effect that 90 per cent of workers who change jobs cash in their pension contributions. I was astonished to hear that. While some may re-invest the money in insurance policies or other long term securities I am sure that is not the case for most of these people. It is only when this type of revelation is made known that one can focus on this problem and realise the possible longer term difficulties that could be caused for many people. It is equally true that many workers feel tied down to particular jobs or companies because of difficulties involved in leaving a pension fund. Naturally pension scheme trustees were not overly concerned with those leaving the scheme which created problems for those concerned to secure their own and their families long term security should they decide to take up alternative employment. It is these two areas that Part III of the Bill, along with the technical details and qualifications described in the Second Schedule, seeks to address. I welcome the provisions in the sections.

I would like to make a general comment on this Part of the Bill and the Second Schedule. I would see great advantage in the production of a layman's guide to the technical detail of the sections in this Part and the Schedule giving some examples of what precisely would happen to pensions in the event of a person leaving employment and how the various calculations would be made. If it would be impracticable to do so while the Bill is in transit through the Oireachtas it would be a very useful early exercise for the board. I may again be pre-empting something the Minister already has in mind but I would be glad if he would consider this possibility so that what can otherwise be technical language, and necessarily so in the context of the Bill, could be reproduced later in more easily understood terms.

In regard to section 33 and the entitlement to transfer payment, I was concerned on reading subsection (3) (b) that a direction to the trustees to apply the transfer payment in the purchase of one or more authorised annuities does not appear to be specific on whether the employee or the trustees select the annuities concerned. I would appreciate if the Minister would re-examine this subsection to ensure that his intentions are clearly met. If the subsection read that the members selected specific or named annuities from particular insurance companies — presuming that to be the intention — then it might read better.

In the same vein, I would be glad if the Minister would elaborate on the circumstances as described in section 34 under which such an annuity may be purchased on behalf of a member without his consent instead of providing preserved benefit. In those circumstances is it the Minister's intention that the member will have no choice in regard to the annuity purchased or the insurance company involved? I would appreciate clarification on this section at a later stage. In regard to these transfers generally, perhaps the Minister would indicate the position regarding those who take up employment elsewhere in the EC or who return to this country following a period of working in another EC country. The reality of the Single European Market is the inevitable greater exchange and movement of workers across national borders. While preservation of the benefits is an obvious option, I would be glad to know if there is any development at EC level to provide a similar transfer payment facility as provided for in this Bill. I know there would be wider financial issues involved and can the Minister say if section 33 (3) (a) can be used for such purposes? I have no doubt there will be many further developments in this area in the near future and arising from greater harmony in EC matters it only serves to underline the importance of establishing the pensions board at this time.

Part IV will be of greatest interest to and cause the greatest activity for the new board. In these provisions lie the very necessary security for all pension fund members. It is essential that all schemes should be subjected to the types of scrutiny and procedural checks which are provided for in this Part and in the Third Schedule. There have been some notable disasters in the past arising from under-funding of pension schemes which can only be tackled through close monitoring of funding arrangements. I am aware that the accountancy bodies have been developing a new statement of standard accounting practice which relates to accounting for pension funds in the financial statements of companies. All of these developments will provide a better and more open policing of the rights and entitlements of workers and members of such schemes. In this context, I would ask the Minister to clarify the position of members when firms go into liquidation and where schemes are found to be under-funded. In particular I would be glad to know where they stand in the pecking order as creditors. This Bill will go a long way towards avoiding such catastrophies but equally they can happen. Where do these people stand in terms of ranking as against preferential creditors?

I mentioned earlier that I would like to see an advisory or public information office established by the new board. Notwithstanding that, I wish to welcome heartily the provisions in Part V dealing with the disclosure of information to members and their families, trade unions and others by the trustees of pension schemes. Section 53, while providing for such disclosure, does not specify a time frame within which this information is to be provided. This type of information equates with that provided for in the Minimum Notice and Terms of Employment Act, 1973, in which a specified period is given — I think four weeks — in which to reply to a request for information on pensions and conditions of employment.

As section 53 (5) makes non-compliance an offence carrying a possible £1,000 fine, it is important to specify the time within which the request must be complied. Perhaps I am being unfair to the Minister here, maybe I have missed such a provision in some other section. If so, I apologise to the Minister, but I think this is worth pointing out.

I can but welcome the detailed provisions in Part VI in regard to the general duties of trustees and their appointment and removal, which appear to be quite comprehensive. Part VII dealing with equal treatment for men and women in occupational benefit schemes is yet another milestone on the road which has seen great achievements in this area over the past 20 years. Notwithstanding the thrust of existing equality legislation, the provisions are very necessary and it is appropriate that the monitoring and implementation of these provisions falls within the framework of the Employment Equality Agency. I am also glad that these provisions are based on an EC Directive which ensures that in this respect we are applying rights equal to those in other EC countries. In this matter also we can be certain that the tremendous expertise and experience of the agency and the Labour Court will be put to good effect investigating complaints.

In regard to section 78, which deals with dismissal arising from an employee's proper use of the facilities afforded by this Bill, I would have thought the Unfair Dismissals Act, 1977, would in any event have made such a dismissal unfair. That being the case if I am right, I am concerned that there be consistent procedure for dealing with and investigating dismissals. The 1977 Act provides for investigation by the Employment Appeals Tribunal who can order reinstatement, re-engagement or compensation. This Bill provides that the Labour Court should investigate and determine the fairness or otherwise of the dismissal, and I believe that complicates existing dismissal law procedures unnecessarily.

In the normal course of events a dismissal appears before the Employment Appeals Tribunal who could just as likely find a particular dismissal in breach of this Bill and unfair, and I am anxious to know what would be the result of such determination. Would it follow that the case had to be referred to the Labour Court? Many practitioners in this field feel that these very important matters should be dealt with consistently, and I cannot help but feel that the Labour Court is an inappropriate body to refer dismissal cases to. I would like the Minister to comment on this.

These matters apart, the Minister has put together a very important Bill which I welcome, and I congratulate him on bringing it before this House. I am sure it will receive the great attention and discussion it thoroughly deserves. I look forward to the Minister addressing the few points I have raised.

I thank Deputy Durkan for facilitating me, because of a time factor to make a brief comment on the Second Stage of this very important legislation.

It has traditionally been acknowledged that the basis of a pensions structure in addition to an income structure is a vital aspect of any individual's rights; indeed up to this moment a very substantial number of our community to which this legislation is directed have not had that aspect of security at the termination of their employment. This Bill is confined to the private employment and occupational employment sectors, but those of us who have been associated with trade union and worker participation discussions down the years find it has taken quite a long time to have it extended to the latter category. In the State, local authority and health boards sectors traditionally one category of worker had the benefits of a pensions scheme and another category termed the servant category were denied it. Within these same bodies because one group were classified as officers they had an entitlement to a pension structure while the other sector, classified as servants, were not so entitled. Finally, in 1974, after much agitation, to the satisfaction of all such people in county councils, health boards, forestry and the State itself, the then Minister legislated to include all grades and categories within the ambit and structures of the pensions schemes applicable to the officer grades in these organisations. I am making that point to demonstrate that, while the officer grade pensions structures came into being with the formation of the State, it took many years to achieve justice and fair play for other categories of workers in the same concerns.

We are now dealing with pensions schemes for occupational workers. The guidelines set out are praiseworthy. They provide that members can change jobs without forfeiting their pension rights. The schemes must be properly funded, employers must deliver on the promises made to their employees, and members must have full access to all information about the running of their schemes and the security of their pensions. Those are all very worthy objectives, but the new pensions board face a horrendous task. They have a terrible job to correlate all the different industries, all the different interests and all the financial aspects of the different concepts they will be dealing with and make them acceptable to for the membership and the workforce.

I do not intend to go into all the sections of this Bill today. However, I welcome this as a first step. This Bill is being introduced now not only to comply with an EC directive but because it is urgently needed to provide safeguards and provisions for people in occupational employment. One can visualise that in a short time, the new Social Charter and new directives originating within the Community will play a substantial part in keeping all such schemes to a satisfactory level, but this board will have a tremendous task on their hands from the outset. We are all conversant with aspects of mutual pensions agreements between substantial occupational employment groups and their employers. We have seen firms going into receivership, with the horrendous consequence for many people that the pension and security that they had looked forward to simply disappeared. I hope this board will be in a position to ensure that such disasters for occupational workers will not occur in the future.

We have looked forward to this Bill for years. Our aspiration is for a comprehensive national scheme which would have a tripartite basis involving the worker, the employer and the scheme. Having regard to the cost of such schemes and the resources available, we are conscious that it may not be possible now to bring this to reality. We hope, however, that this is the first major step in ensuring that occupational employees and their dependants will have some support at retirement age.

Not only must the employee be provided for by way of a reasonable and adequate pension but due regard must be had to the employee's dependants in the case of death. Some existing private schemes cover this area to some extent. It is a very important factor and such provision will have to be of general application. In the event of the death or serious injury of an employee, his dependants must be provided for.

The importance of the trustees and representation on the board will be discussed specifically on Committee Stage. We believe that the success of a scheme will depend on information being made available by the trustees to the workforce. The membership of the board is not a suitable topic for discussion now but it will be the subject of amendments on Committee and Report Stages. We must set up a competent board which will look after the interests of occupational employees and enjoy their confidence.

The Labour Party welcome this Bill but we have substantial reservations on certain sections. We will endeavour to ensure during subsequent Stages that these weaknesses are eliminated so that the Bill when it comes into law will be a model of efficiency and of immense benefit to a sector of our workforce who have been left unprovided for.

I welcome the Bill and hope it will achieve its laudable objectives. It attempts to set out minimum standards and requirements to ensure the protection of contributors to pension schemes so that when an employee wishes to obtain his rights under a scheme he will find the fund intact. I will comment later on that aspect.

The Bill is quite complex and detailed and I am not sure that it will identify and deal with all the problems which have occurred in recent years. It does not follow all the recommendations of the National Pensions Board but goes part of the distance. I hope the provisions of the Bill will be sufficient to guarantee the rights of those involved. The explanatory memorandum states that the Bill is to provide for the compulsory preservation of pension entitlements of members of occupational pensions schemes who change employments and for the subsequent revaluation of such entitlements.

There are some pensions schemes already operational which are quite good and have worked very effectively. The Construction Industry Federation have a very effective and thorough pensions scheme on which I compliment them. I have never found them wanting and they are very careful to ensure that an individual's entitlements are carefully guarded, regardless of when the contributions were made, or when the person ceased to be employed, changed employment or emigrated. The records of the scheme seem to be as near perfect as one can get. We can all criticise the failings of various schemes but the opportunity should not be missed to congratulate those which have operated very well.

A number of instances have occurred in the past few years involving individual employees who have contributed assiduously over many years to pensions schemes. Their employment may have been interrupted and they may have returned to employment again. For one reason or another somebody within the company interrupted the normal procedures and the unfortunate contributors discovered at the end of the day that their normal pension entitlements were not stashed away. This Bill proposes to eliminate the interruption of normal procedures, the raiding of funds and their utilisation for other purposes. That has happened on a couple of well known occasions but I am not sure that this Bill will be a panacea which will eliminate that kind of practice. There will always be some people who will attempt to circumvent legislation in a fashion which in the short-term may be beneficial to themselves. The Bill may not be capable of preventing that but at least it goes some way towards identifying the major weaknesses in the various systems.

There was no overall governing body such as the one we are now to have. I am sure every Member of the House shares my hope in this regard — if individuals contribute to a particular scheme for a number of years then at the end of the day they should be entitled to benefit from whatever contributions they have made.

I am sure every Member of this House has had countless dealings over the years with insurance companies who have operated and cared for various schemes. I hope this Bill will bring about some changes in this area. Some employers have initiated pension schemes with very little cost to the employee but the benefit of such schemes to the employee can be minimal at the end of the day. Perhaps the Minister should put a little more thought into what actually constitutes a worthwhile pension scheme, particularly those schemes operated by insurance companies. There should be no difficulty nowadays in working out the details of a scheme which will not be all that punitive by way of contributions from an employee during the course of his employment, while at the same time being fairly beneficial to that employee at a later stage.

I want to refer to some difficulties which have arisen over the years in relation to pension schemes. I hope the National Pensions Board will not be a bureaucratic and impersonal body so that when a query is raised, as undoubtedly it will, they will be able to respond in a compassionate fashion, particularly when dealing with widows, who are in a vulnerable position, in attempting to obtain the benefits of a scheme to which they or their husbands have contributed. In the case of countless pension schemes which are being operated at present the spouse of a husband or wife who was 45 or 50 years when he or she died and who had contributed to such a scheme over a long number of years can very well find that their entitlement to benefit died with their spouse. This is a very serious issue and has happened on a number of occasions. It is very unfair and there is absolutely no necessity for it. I am not sure the Bill will be capable of dealing with this problem. I am sure other Deputies have come across this problem on occasion. In many cases conditions were laid down at the inception of the pension scheme which predetermined what was going to happen at a later stage. This is no excuse for what happens in such cases and people should be able to restructure schemes when the necessity arises.

There has been a tendency by some companies operating schemes to rely too much on the small print of the scheme when the pay-out time comes. I am not sufficiently au fait with all these schemes to go into them in detail but a number of ones I have come across contained a death benefit. I have had great fun with some companies in attempting to extract information from them before a necessity arises. I am sure other Members of this House have experienced the same consternation in trying to determine precisely the best thing to do in certain circumstances. In some cases the wives of constituents of mine have come to me after, perhaps, having had a discussion with their family doctors about their health or that of their spouses. In such cases I should like to be able to gain access to information so as to be in a position to advise the individual concerned what she should do in her best interests. I believe this Bill will cater for such cases in terms of the availability of information. Of course, I know this will mean the availability of information on an ongoing basis so that we can obtain information for the contributor to a scheme regarding his or her entitlements and information on the security of the entire pension fund so that we can be sure the funds are not being drained off by some mysterious means in a different direction, being used for other purposes or shoring-up a firm which might be creaking. The Bill deals with all these important issues.

I do not want to digress from the Bill but I have to say that I have been disappointed at the manner in which the small or fine print has been interpreted in the past by some of the custodians of pension funds or insurance schemes. I know we are talking here about contributory schemes but in some cases funds are paid into solely by, for instance, employers and it appears on the surface to employees that they are entitled to certain benefits. However, when they go after those entitlements they find there are restrictions or regulations laid down in such a fashion as to create an obstacle course for the person concerned. I do not think this should be allowed to happen. It is a sort of sidestepping of the regulations and it is totally unfair to the unfortunate employees who are faced with that problem. Invariably the people who suddenly come face to face with this type of problem are the ones who are hard pressed financially and cannot afford the expertise to take on the large companies.

The Bill proposes to clarify the duties and responsibilities of scheme trustees. This is an important provision having regard to previous incidents we all know about. Obviously the responsibilities of the trustees are to ensure that the benefits are essentially retained and made available when the time comes and the scheme is not interfered with in any way. The Bill also proposes implementing the principle of equal treatment for men and women in occupational benefit schemes. We must all welcome this provision for the simple reason that it was easy in the past to say that because of certain contributions, payments or wage levels, women had a lesser rate of entitlement at the end of the day. It was very handy to be able to do that and it is only proper that this is being amended in the Bill. I may also add that it is only to meet an EC requirement that this provision has been incorporated in the Bill. I make that point in case anyone thinks it was included as a result of divine inspiration here or elsewhere; like many other things, this provision has been included in the Bill because of an EC requirement.

In regard to the question of transferring benefits of an employee when he or she moves to new employment or leaves the country, there is probably room for even finer tuning of the system in the context of EC law, just as individuals can at present have social welfare benefits credited on the basis of their contribution in another country.

I hope the Bill takes full account of the free and open economy that we will have coming into 1992, and the speed with which the financial transactions will be able to take place. I hope somebody does not wake up some morning to find that what we have been trying to do in this Bill has been eroded with some computer throwing up a lot of blanks on the screen indicating that where there was a healthy fund it has now disappeared to some financial institution in Hong Kong. Modern technology has been worthwhile and advantageous but there are also risks attached to it. I hope that the new freedom of movement of money will not become a means for circumnavigating any aspects of the Bill.

The pensions board is also being set up, which is a good idea. I hope it will have sufficient teeth to ensure that matters are carried out in an above board fashion. The Companies Bill is going through at the moment and for my sins, I had to sit on that Committee a couple of times. It is, however, a necessary Bill and will, I hope, deal with some of the problems that might possibly arise in regard to pension schemes. I hope however that we will not see, as a result of this Pensions Bill, a repetition of some of the debacles we have seen in the past, with people deciding to investigate their entitlements under a pension scheme and finding that they have none. This sort of thing has happened in the past and is still happening. For example, people have sold houses and lodged the money with an investment company and found, three or four days later, that there is no money and no house and no investment company and that their hard earned savings are all gone. I am not so sure we will eliminate this problem. I am specifically avoiding naming particular institutions, but we all know of them. I suppose the pensions board will be able to police the operation of these schemes. I have looked through the Bill and it looks as if they will, but other Bills have failed to eliminate the kind of abuses I am referring to. I mention that because we have all come across constituents who have had bitter experience of dealing with some of these fast moving financial institutions. That is all I want to say about that. Generally, I welcome the Bill. I hope it will eliminate the abuses we have seen in the past, protect the rights of contributors to pension funds and that it will discourage possible abuses by eliminating avenues for such before they arise, so to speak.

I had hoped that a little more could be done for the self-employed. Many would say that the self-employed should be made to look after themselves but, whether self-employed or employed by somebody else, individuals who contribute to a pension scheme are entitled to equal treatment and there should be no distinction. If one is prepared to put money into a scheme one should get good value in return. For the self-employed there is the question of income tax concessions and that is a sensitive area in this country because there are different views on it, depending on what side of the ideological fence one stands. It would be no harm if the Minister would look again at the range of schemes for the self-employed and the manner in which they can be operated to take into account the tax code and the tax concessions that are available to see whether some improvement could be made there which may not be costly to the State and may in fact be beneficial to the State. There is a State pension scheme already in operation. I hope the one we are talking about now does not have as many sharp turns on the road.

Having said that, I hope this Bill will achieve its objectives. If it does that it will have eliminated some of the difficulties experienced by people in the past.

This Pensions Bill is very important and will provide much needed protection to members of schemes who, in the past, were not sure of their position. In the changing labour market and with greater life expectancy of employees this Bill comes at an appropriate time. It is important that the Bill looks at equal treatment for men and women, although it does not go all the way down the road, which is a disappointment to me. I will elaborate on that shortly. It does, however, set important minimum standards of contributions for schemes and this is important.

This is a complex Bill in that it must cover many schemes and members of those schemes. A study of the 12 European countries which was produced recently did not show Ireland in a great light as far as provision for pensions is concerned. It showed that our pensioners were worse off than pensioners in any of the EC member stakes in terms of what their pensions can buy. In addition, it was felt that the drop in their income on retirement was the worst in the EC, with the exception of the UK. For example, in the Netherlands on retirement an employee can expect his or her pension to represent 93 per cent of previous earnings. That is very different from the position of most pensioners here. In terms of purchasing power, Dutch pensioners are more than twice as well off as their Irish counterparts.

It is important that the Bill deals with the problems experienced in many schemes. We must look at age structure and life expectancy levels when talking about pensions. The indications are that people can expect to live 15 years after retirement and, therefore, it is important that people prepare for retirement by proper financial plan. Many people receive a pension from their employers but time and again we come across self-employed businessmen and farmers who have not made provision for their retirement. I have met many people who were in poor circumstances because of bad planning in their early years. I hope that as a result of the debate young, self-employed people, including farmers, will realise the importance of planning for the future.

During the course of the debate on the Bill dealing with nursing homes I learned that the cost of private nursing home care for elderly people varies between £120 and £150 per week. Another reason why people should make adequate provision for their retirement is that they may have to enter nursing homes in their later years and may have difficulty meeting the cost. People should realise the need to join pension schemes and prepare for their retirement.

I am pleased that the Minister has decided to establish a pensions board which will monitor and supervise schemes. I am also pleased to note that a wide range of interests will be catered for on the board, in particular that the membership will include a trade union representative who will represent employees. That person will highlight the problems of employees and, through the board, will bring them to the attention of the Minister. The remit of the board is wide and, aside from ensuring that the provisions of the Bill are implemented, they will have comprehensive powers to carry out inspections of the various occupational pension schemes. I note that failure to comply with the requirements of the Bill will be an offence and I hope that the penalties, which are significant, will act as a deterrent.

The implementation of Directive 86/378 is important but it does not go far enough. However, I am pleased in that it represents a significant step forward. The Bill covers occupational benefit schemes, access to schemes, benefit rights and contribution levels. I am pleased to observe that under the directive women will receive special treatment in connection with pregnancy and childbirth but I am disappointed that the Bill does not include a provision on equal treatment for spouses and children of women employees. We are all aware that many families depend on the income support of the working woman. When I was employed in the public service in the early eighties I was a member of a pension scheme and the widows' and orphans' pension scheme. However, the widows and orphans element has been changed to spouses and children. The change means that women in the public service can provide for their dependants. It is a pity that we must have a pause before there will be full equality in all pension schemes, private and public.

My anxiety in regard to this was relieved by the Minister's commitment to eliminate all discrimination between men and women in occupational social security schemes. I am pleased that the equality will be implemented in the next two years. The provisions of the Bill will operate from 1 January next and I understand that the equality provisions must be implemented by January 1993. Working women should have the option to contribute 1.5 per cent or 2 per cent of their income to provide for their dependants. If there is an option it will represent a cost to the employee.

I should now like to deal with the preservation of benefits for members of pension schemes who leave after the commencement date but before attaining normal retiring age. That change is vital. In today's labour market the average employee will change jobs quite frequently. It is important that the pension schemes to which they have contributed should be preserved and passed to the next employer. As a result of the change, rather than receiving a number of cheques for a small amount when they retire people will receive one cheque from their last employer. Sections 26 and 28 are designed to protect the benefits of those early leavers and to create greater movement. I welcome those provisions.

The transfer of payments between employers is important. It is good that the transfer payment equivalent to the value of the benefit will be made to the scheme of the new employer or to an improved annuity bond underwritten by a life office. In addition, there will be an obligation to accept the transfer payment from the scheme of the previous employer while being free to determine the amount and form of the benefits accrued by such payments. Any preserved benefits provided under a benefit scheme will be revalued after five years from the date of leaving and the rate of valuation will be equal to the annual rate of increase in the consumer price index, or 4 per cent, whichever is the lesser. That covers the differences in the five year period between the two employers.

Part IV is of great importance in that it sets minimum standards. We were all concerned about that and planned that it will be possible to have close monitoring of schemes. There is a requirement that certification will be needed to show that specified minimum standards are being applied. It is hoped that sufficient resources will be put at the disposal of the board to ensure that the regulations ware put into practice. The pensions board will act as a watchdog. There will be a similar approach in regard to the disclosure of information. It is important that information should be made available to the pensioner, the pensioner's spouse and the trade union representative.

Powers are given to the trustees and actuaries to obtain information, not only to ensure a free flow of information, but also so that parties tempted to engage in sharp practice of various forms may be deterred. The freedom to see all documents pertaining to the scheme is provided for and the fact that annual audited accounts and actuarial valuations are compulsory should diminish fears regarding the operation of the schemes.

The sections requiring disclosure of information are vital to ensure that there will not be a repetition of past cases where pensioners lost their life time contributions and pension entitlements. While the Bill covers a large area about which we were all concerned, I should like to see further progress on the issue of equality. However, from the Minister's approach, it is obvious that there will be progress in this area.

The Bill has produced much needed minimum standards, regulations and safeguards while, at the same time, providing greater access to preserved benefits and the transfer from one employment to another. This will provide greater efficiency and flexibility as workers prepare for their later years while also protecting their interests if they need to change employment to make progress or to be promoted.

The Minister faced a most difficult task in presenting this Bill because there are 25,000 different occupational pension schemes in operation at present. It is important to ensure the security of members' pension rights as they stand but we could not afford to put the continued development of pension schemes at risk by over-regulation. The Bill provides for major, progressive improvement and I compliment the Minister for introducing it. We look forward to its implementation.

Fine Gael welcome the Bill as we had been pressing the Minister to introduce it. Indeed when introducing it, he said it was the most important legislation concerning occupational pensions to come before the House since the foundation of the State. I might not fully agree with that remark but it is certainly very important legislation.

The Minister also said that he wished to ensure that members can change jobs without forfeiting their pension rights, that schemes are properly funded, that employers deliver on the promises made to their employees and that members have full access to all information about the running of their schemes and the security of their pensions. We welcome all these measures and we compliment the Minister for introducing them because Fine Gael had been pressing for them for some time. Indeed, last March we specifically called on the Minister to introduce the legislation without further delay.

The Minister acknowledged the work of previous administrations and said it was against this background that the National Pensions Board was established in 1986, to report to the then Minister for Social Welfare — the former Deputy Barry Desmond — on the priorities for the regulation of occupational pension schemes and the general development of pensions for the future. Thus began a process which has culminated in the publication of this Bill. We are very glad that the Minister generously acknowledged that aspect in his introduction to the Bill. It is in the spirit of that approach by the Minister that Fine Gael welcome the Bill. A number of amendments may be necessary on Committee Stage. Some may be introduced by the Minister or, where necessary, by the Opposition spokes-persons. Fine Gael believe that the Minister made an error in failing to adopt the full proposals of the National Pensions Board regarding equal treatment and member trustees.

We welcome the provision in the Bill regarding minimum funding, disclosure of information and the establishment of a pensions board. We particularly welcome the provision for the preservation and transfer of pension rights. We will propose amendments to ensure that member trustees are appointed to large schemes within a fixed period after the Bill has been enacted. We also want to provide for full, equal treatment as recommended by the National Pensions Board and which is in line with current practice in many cases. It is vital to clarify legal uncertainties enshrined in the Minister's proposals.

The aim of Fine Gael is to ensure that the Bill is as simple and cost-effective as possible. It is vital to ensure that there is a mechanism to encourage the provision of pensions and to discourage employers from worsening pension schemes. Fine Gael are concerned at the level of exemptions proposed in the major sections and we will be anxious to hear the Minister clarifying his intentions in this regard.

The Bill is a welcome development in pension law as it replaces the Trustees Act, 1893, and the Perpetual Funds (Registration) Act, 1933. The success of the Bill is due in no small way to the National Pensions Board who thrashed out many of the issues involved. It is a model for other complex, specialist legislation.

This is significant legislation which will benefit many employees not currently in pension schemes. It will also benefit the State because at present many low paid employees are pushed out of service industries without a pension, often after working all their lives in the same firm. These people are often in their fifties and sixties; sometimes they have been in a live-in job with the result that they also lose their home. I am glad that the Minister of State at the Department of the Environment is sitting in for the Minister for Social Welfare because I know he is familiar with the problem of people who have been pushed out of their jobs and accommodation, which means that they have to join the local authority housing list. If proper pension facilities were provided for everyone there would be less of a strain on local authorities having to provide housing. From our involvement with local authoriites we know that there is a strong demand for local authority houses from people who are unemployed in their fifties and sixties and who do not have a pension. Indeed, local authorities now provide specialised housing for such people. If they can be helped in this Bill it would also benefit the State because it would not have to provide further facilities for them.

I hope that this Bill will mean that people who are pushed out of employment will at least still have their pension entitlements. There are many more people in this position than is generally recognised. I spent 25 years in the same occupation before I became a TD. I left my job without receiving any redundancy payment, lump sum, or pension rights, in fact without leave of absence. My employers said: well done on your election to the Dáil; we are sure you will not need leave of absence. I hope their confidence in me will prove to have been justified. There are countless numbers of people like me, people employed in other service industries. For example, I was part-time, then full-time, then part-time, then self-employed and again a part-time employee; that was my type of employment. I worked in livestock marts all my life. I merely give that as an example of the circumstances in which a number of people find themselves having worked perhaps half their lifetime in the one job or perhaps different jobs. It would be my hope that the provisions of this Bill would cater for such people rendering it easier for them to be included in pensions schemes.

The Bill proposes the establishment of a pensions board which will monitor and regulate the pensions industry, ensuring that these provisions are complied with. In addition to the establishment of a pensions board there will be included also the preservation of benefits, minimum funding standards, disclosure of information in relation to schemes, trustees of schemes and equal treatment of men and women in occupational pensions schemes. While the provisions of the Bill provide a framework within which occupational pensions schemes can be operated, it would appear that the self-employed and those in non-pensionable employment once again have been omitted. That is why I mentioned my employment circumstances and those of a number of others finding themselves in similar circumstances.

While I welcome this Bill as it stands in relation to occupational pensions schemes, nonetheless thought should be devoted to the provision of pensions for the self-employed and those in non-pensionable employment. I know there is a contributory pension entitlement for the self-employed. However, that leaves a category of persons dependent on the State whereas, were they given sufficient fiscal encouragement, they could make such provision for themselves.

Our spokesperson, Deputy Flaherty, will be tabling some amendments, and we will be anticipating some on the part of the Minister, on Committee Stage. In the course of his remarks the Minister indicated on a number of occasions that he will give favourable consideration to such amendments, where necessary.

The provisions of this Bill are indeed necessary. There has been much worry caused by the collapse of high profile pensions schemes in recent years. For example, there were the cases of H. Williams and the Castlcomer collapses which caused many people worry, they being in similar circumstances. Certainly the provisions of this Bill will tighten the position somewhat in that regard. There is no doubt that those and other events have worried employers and employees alike. It would be my hope that the introduction of this Bill would help to allay such fears.

In replying I should like the Minister to clarify a number of matters for me. For example, in the course of his introductory remarks he had this to say:

Members also have a right to information on their schemes under trust law, but legal proceedings may also be required ultimetely to obtain redress in this area. The likelihood of long delays and the uncertainty as to the outcome, given the vagueness of trust law, will generally act as a major deterrent to members taking legal proceedings to enforce their rights, particularly given the substantial legal costs that could be involved.

While accepting that, I wonder how does the Minister reconcile that apparent contradiction? It is all very well that, under existing law, somebody can take their case to the courts to ensure that their right to information is enforced, but if there is a prohibitive factor included, how can they do so? Later in his introductory remarks the Minister made this comment:

The new board will be broadly representative of the main interests in pensions schemes, namely, the trade unions, employers, the pensions industry and the Government.

That poses the question: what percentage of the pensions board membership will be representative of the trade unions? We must remember that not alone will the trade unions be safeguarding the interests of their members but they will be representing the views of all employees.

Later in his remarks the Minister had this to say:

The success of this legislation in safeguarding the rights of pension scheme members is crucially dependent on the board operating with the maximum efficiency. I believe that this can be best achieved by having the administrative expenses financed by the occupational pensions schemes.

It is indeed strange that it is proposed that the administrative costs should be borne by pension schemes. I wonder whether that is justified, or whether such administrative costs should not be funded separately rather than be a drain on pension schemes. Under the heading — Exclusion of Certain Categories — the Minister said:

It is my intention to exclude public sector schemes who operate the public service transfer network from these requirements. Such schemes cater for those employed in the Civil Service and the broader public service, including the vast majority of semi-State companies.

Later he said:

There is also in existence an extensive transfer network whereby full credit for past service is provided to employees moving within public sector organisations.

Would the Minister say whether the provisions of section 36 cater for the present employees of FÁS, who I understand intend taking legal action on 11 June in pursuit of their pension scheme rights. Under the provisions of the Labour Services Act, 1987, AnCO personnel, now employees of FÁS, find that the Minister for Labour is not honouring the provisions of their pension scheme that obtained when they were employees of AnCO. They propose taking strike action in support of their claim. I hope the Minister will be able to assure the House that the enactment of this Bill will solve that problem, thus, hopefully, eliminating the necessity for their proposed industrial action. If the Minister can give such assurance it will indeed be helpful to FÁS employees, perhaps eliminating the necessity for their proposed industrial action and its knock-on effects which will affect them severely.

We in Fine Gael welcome the introduction of this Bill for a number of reasons apart from certain reservations and the amendments we shall be tabling on Committee Stage to strengthen its provisions. Its provisions will ensure a fully transferable pension scheme, much to be desired at present because we must remember that people change employment frequently, sometimes four or five times in their lifetime; it is not like the position that obtained years ago when people remained in the same employment for life. The portable aspect of the new scheme is very desirable and we welcome it. Perhaps the Minister would indicate when he is replying the relationship between the new pensions board and the Revenue Commissioners? I understand that the Revenue Commissioners have a section, albeit under a staff section which monitors pension schemes and this new scheme does not fit in with that section. Will the Minister outline what he proposes to do in this regard? As I have said, I will be seeking clarification on this and the other points I have raised. However, in general I compliment the Minister on having acknowledged the necessity for introducing this legislation we have been pressing for. We await with interest the Committee Stage when we will be pursuing the necessary amendments.

I will be very brief. It is only right and proper that Deputies should come into the House and congratulate the Minister on introducing this Bill. I recall questioning the Minister's predecessors, the former Deputies Hussey, Eileen Desmond and Barry Desmond on many occasions in this House. I always felt that the aspect of social welfare that needed a push was a national pensions scheme. I compliment the Minister on his initiative in this regard.

I know a great deal of work and research had to be done to introduce a national pension scheme and I congratulate the National Pensions Board and the Minister on ensuring that such a scheme will now be on the Statute Book. In his speech the Minister dealt mainly with procedures and the safeguards for the pension funds, matters which, of course are of vital importance. For many people the investment in a pension plan is the most important investment they are likely to make both in terms of cash and financial security. It is therefore important that these life long investments are not only well managed but are seen to be properly managed and that the members are provided with the information they require to satisfy themselves in this regard. Too many workers after long years of making contributions to pension funds were shocked to learn that the funds into which they had been paying went out of existence. One can well imagine the shock and despair of a worker on finding himself in that position.

I wish to refer to compulsory preservation of benefits. I welcome the compulsory preservation of pension rights of workers who leave their jobs. Too often workers were blackmailed into staying in unsatisfactory employment because to leave would mean losing their pension rights. Very often this artificial barrier dictated the conditions of employment and salary which was often under a national wages agreement. I welcome the removal of this obstacle.

We all welcome the Bill which gives effect to the requirements of the EC Directive which provides for the implementation of the principle of equal treatment in occupational benefits. A very important provision in the Bill is the one relating to penalties for offences. The Bill provides that a prosecution for an offence may be instituted by the new Pensions Board to be established under Part II of the Bill. Very few members would risk instituting proceedings in the High Court. Under the provisions of this Bill, an aggrieved member can request the Pensions Board to take an action on his or her behalf against a defaulting trustee. I believe this is one of the significant safeguards enshrined in the Bill.

With regard to the annual report by trustees giving basic information on the scheme, I would like to know if members are made aware in advance of any amendments to the scheme over the years? I do not know how one should approach this, but if amendments are to be made, members should know in advance the proposed amendments and their observations should be requested. I have always believed that if one is to change something, notice should be given to members so they can make their contribution. We are trying to bring perfection to the Bill and I would like the Minister to enlighten me further in this area. I do not think it is in the Bill but the Minister referred to it in the course of his speech. Amendments can be made which can cause disruption to members if they are not to their satisfaction.

I was glad to hear the Minister say he was determined to ensure that member participation in the appointment of trustees will be dealt with in a way that will give members an effective and meaningful role in the administration of what is after all a scheme designed for them. I had certain reservations about this part of the Bill but I am prepared to accept it having listened to the Minister's explanation. However, I hope there will be no delay in appointing a member to the board of trustees. I have no doubt that employers would also like to see a member working on the board of trustees and this would be in their own interests. Co-operation between workers and employers will be of tremendous benefit to everybody.

I have a great deal of experience of problems in the building and construction industry. I know people who had given years of their working life to builders and on retirement found that the pension fund no longer existed. We had too many cowboy builders in recent years getting rich over night at the expense of their workers. The safeguards of pension funds which the Minister is now introducing would have been very important to these people. It is very sad that a worker, after giving years of service, finds that the pension no longer exists for him. How many employers invested members' contributions in their business and then conveniently went into voluntary liquidation and bang went the pension fund which was part of the financial structure of the industry? I have dealt with many workers in the building construction industry who were deprived of their rights and the moneys they had contributed to the fund, and for that reason alone, I welcome this Bill.

I wish the Bill every success and hope its scope will be broadened over the years to include the self-employed and those in non-pensionable employment. It is new and deserves the support of everyone. I am glad the trade unions also support the Bill although they have one reservation regarding the trustees. From reading the Minister's brief and from the explanation he has given, I have no doubt trade unions will understand that this is something that is in its infancy and needs a trial period to reach perfection. I can see great things in this Bill. I hope the trustees will monitor the whole performance of the Bill so that we can break into different fields — as I have mentioned, the self-employed and those in non-pensionable employment. Trustees should concentrate on how best these people could be included. Many people do not want to depend on the State. This Bill places a tremendous emphasis on the future of pension schemes. Young people starting employment should ensure that they are involved in a pension scheme. I see great hopes in introducing a long-awaited and long-demanded measure by members of the various political parties.

I would like to refer to the transfer of pensions. Many of our young workers have emigrated and are in employment, perhaps pensionable employment, in other countries. I wonder if there is a possibility that they could be included in this pension scheme. If they are in pensionable employment abroad I do not think there would be any complication for insurance companies in transferring their pensions. Many of these people, especially as far as the construction industry is concerned, want to come back home. I understand builders are asking former employees to return home as there is now an up-lift in the building industry. These people have had a sad experience of pensions in this country. Perhaps the Minister would comment on this matter and consider widening the scope of the Bill over the years to include emigrants in the pension scheme. There may be certain complications but I would like a comment from the Minister on this. It is very important that emigrants return on retirement. They do not want to be a burden on the State and are prepared to contribute to their independence. It would maintain the link between the people at home and the emigrants if they were involved in a pension scheme.

As I have said, I want to be brief because I know many Members want to make contributions. I have no doubt the Minister will be prepared to consider amendments which would improve the Bill. This measure is new and deserves a trial run and concentration as to its working. As I have said I hope it will be broadened to include the self employed and those in non-pensionable employment. On behalf of the Progressive Democrats, I welcome the Bill. We have been advocating this idea since our inception. Since I entered the Dáil about 25 years ago, and from earlier in my career in political life, I have been continually advocating the establishment of a national pension scheme to safeguard our workers at the end of their working lives.

Last year when I gave up the previous position I held to stand for election to Dáil Éireann, besides all the other risks I was taking I was throwing away pension rights that I had built up for a period in excess of 11 years. It was an area in which I felt legislation was needed, as a sum of money was being put aside on my behalf on an annual basis until such time as I reached retiring age. I am very pleased that the Minister for Social Welfare has now brought this legislation before the Dáil and I know it will be welcomed by the approximate 550,000 employees and their families. It affords them a degree of security that was not there previously.

The setting up of the pensions board to monitor and supervise on a regular basis the activities of the pension scheme is a very important development. We have seen in the past the scandal whereby firms were reportedly making their PAYE and PRSI returns on a monthly basis on behalf of their employees but when something went wrong and these employees went along to claim the benefits they were entitled to, it transpired that these funds had not been paid over to the Revenue Commissioners. Indeed we have also seen the situation in the past whereby some pension schemes were under-funded, and significantly so in some areas. In all these instances to a large extent the employee was at the mercy of his employer but thankfully the provisions of this Bill change that situation. The duties of the trustees of these schemes are clearly outlined and I welcome particularly the section relating to the disclosure of information in relation to schemes.

For too long members of occupational pension schemes knew that an amount of money was accruing on their behalf each week or each month but beyond that they knew nothing else. They did not know how this scheme was being administered, they did not know how it was performing and, most particularly, they did not know what payments they were going to receive on a regular basis when they retired. Furthermore was this payment index linked or was it a flat rate which would very quickly lose its value? Under this new Bill the trustees must provide members with certain financial and other information about the scheme. Also the individual rights and obligations which arise under the scheme must be disclosed. If this Bill is enacted and a member is unhappy with the way his or her scheme is operating, they would then have recourse to the pensions board to have the matter investigated.

At present most pension schemes are established under trust law. Trust law has evolved primarily in relation to family and charitable settlements and it is not always easy to apply to the different circumstances of pension schemes in that much that is embodied in the Trustees Act, 1888 to 1958, with its precise limits are hard to define. The main body of the statute laws are contained in the Trustees Act, 1883, which was not passed with pension schemes in mind.

The common law view of trust is that the settlers or persons setting up trusts should have complete freedom to make whatever provisions they think fit. Most statutory provisions only take effect in the absence of some expressed provision in the trust instrument. Trust law is not normally restrictive and where the legislator has thought restrictions to be necessary there has been specific legislation in relation to certain charitable trusts.

There is therefore an absence of any specific statutory provision covering the duties of pension scheme trustees. Trust duties may be set out in the trust deed but there is no general law regulating what should be included but duties of trustees may in fact be very limited if the trust deed so provides. The only general obligation of trustees is to administer the fund in accordance with the provisions of the trust deed. It can, therefore, be difficult to assess if trustees, or deeds, are performing properly and in accordance with trust law.

At present if members of a particular scheme have reason to believe that the scheme is not being administered in accordance with the provisions of the trust deed, or is being mismanaged, the redress currently is through the courts (a) by suing for breach of trust, or (b) for an order removing the trustees. I am not aware of any such case that has come before the court here which specifically related to pensions schemes and in any event the cost, delays etc. involved in such proceedings would be quite substantial and perhaps make the action prohibitive.

While members of pension schemes do have certain rights at the present time to information concerning their own pension scheme, this is not generally realised by the beneficiaries. Moreover, those who are aware of their legal right to information are generally unclear as to what this right involves and how it can be asserted or enforced. In any event for those who do realise that ultimate legal proceedings may be required in order to obtain redress, the likelihood of long delay and substantial costs would act as a major deterrent.

Because of the provisions of this Bill members of occupational pension schemes may now be assured that in order to comply with the new legislation their scheme will have to be structured in such a manner as to be in a position to provide promised benefits, not only on completion of service to pension age but also to be adequately funded to provide a realistic proportion of such benefits which would be inflation proofed should they leave service or should the scheme be discontinued prior to pension age. It is a welcome development that an employee who is a member of the pension scheme with five years' service completed will be automatically entitled as if he or she remained in service and in addition this benefit will now have to keep pace with inflation up to 4 per cent per annum over the period up to pension age. Facilities to transfer benefit to another scheme or into a personal annuity bond underwritten by a life office are also a major step forward.

Because pension schemes are entered into voluntarily and are not imposed by statute it may be argued that it is inappropriate to legislate for compulsory preservation of pension benefits. In our society generally and in the employment area in particular there are numerous examples of legislation governing activities entered into by choice and there is no reason why this should not be so in the pensions field.

Under this proposed legislation all schemes must provide preserved benefits for those leaving service. For many who will leave a company after a short period of service the preserved benefit is likely to be trivial. It can be argued, therefore, that in such cases there should be no compulsory preservation. However, with increasing mobility of labour one must guard against the possibility of a number of successful employments of short duration with no pension rights eventually becoming a high proportion of an employees total working right. Therefore, I feel that the preservation requirement should apply to those leaving with a short minimum period of service and I feel that this has been adequately captured in this Bill.

The funded pension schemes are an effective safeguard for members' pension rights only if enough money is set aside to meet the schemes liabilities. In setting the funding policy for a defined benefit scheme the main emphasis is generally on the ongoing position i.e. are rates of contributions sufficient to fund adequately each member's expected pension prior to his or her retirement. Particularly recently the extent to which a pension fund could meet its obligations and wind up were probably not considered as part of the normal actuarial valuation process.

We must remember that in framing proposals for a minimum funding standard Ireland has a high percentage of small companies many of which make pension provision for their employees through the medium of pension schemes operated by an insurance company. The funding year is usually on a premium which is paid annually. Almost invariably the annual input to a scheme funded on an annual premium basis is less than one funded using a more conventional group funding approach. Consequently the overall amount available to provide benefits in the event of a wind-up would be lower.

The world population is growing at an enormous rate and it is becoming increasingly difficult to provide jobs and an adequate standard of living for the increasing population. Partly because of this there has been a tendency over the last number of years to reduce the working week, to provide job sharing schemes and other incentives and efforts to try to get as many people as possible into the workforce. There is also more of a tendency nowadays to try to retire people earlier basically to try to get them out of the workforce earlier in life. While this creates other job opportunities for younger people, it causes problems for the person who is retiring and throws up new challenges to them. There is accordingly far more leisure time available to people nowadays and this time has to be filled somehow, lest stagnation and disinterest in life is to set in. To fill these periods, certain activities are often undertaken which in many cases cost money. Because of this proper provision has to be made while one is in employment so that an acceptable standard of living can be maintained in retirement.

Despite the question of costs it must be recognised that the main objective of an occupational scheme is to provide members with an income in retirement which, when taken in conjunction with whatever social welfare benefits are payable, is sufficient to maintain a reasonable standard of living. This objective will not be achieved however unless there are arrangements in operation to increase pensions in payment in order to protect the real income of the retired member. Accordingly priority must be given to developing arrangements which would lead to a greater level of protection for pensions in the course of payment than had been achieved previously. Because of the likely costs involved it should not be assumed that employers alone should be asked to pay the total cost of such arrangements. For example, members might be willing to pay part or all the additional cost involved.

While it is important for the people who are retiring to be in a position to maintain the standards that they are used to, certain funding standards must also be maintained. All the pensions schemes in the world or all the regulations in the world, will matter little if the amounts being transferred to the pension fund are insufficient to meet the future demands. That is why I welcome the minimum funding standards which are set out in the Bill for defined benefit schemes which are funded. I note that these will be subject to actuarial supervision and that the Pensions Board will have to be satisfied that sufficient assets are maintained within the fund to provide the specified minimum benefits. I am glad that schemes which are seen not to be in accordance with these provisions will be required to submit a proposal to outline the measures that it will be intended to take to ensure that any deficiencies in the fund are quickly made up. As I have said earlier, this is an area where many people on retirement have found out to their detriment that sufficient moneys have not been provided for them but thankfully this problem will now be eliminated.

A by-product of this Bill which I believe is going to be of benefit is that it will give more flexibility in the labour market. Up to now the fear of losing pension rights by transferring from one occupation to another, has discouraged many employees from seeking new horizons and new challenges. The old adage that familiarity breeds contempt could certainly be used here as the longer a person stays at a particular job, the more likely that that person is going to become uninterested and accordingly less productive, thereby reducing standards. The provisions of this Bill provide a much needed flexibility and can be of tremendous benefit to those amongst us who are bored and fed up with life and need a change not only to improve their work performance but which as a consequence would also improve the quality of their life. This is a very real social benefit of this Bill and one which I think should not be forgotten.

We cannot always expect the State sector, through the social welfare services, to provide money in these circumstances to meet expectations. The social welfare services are there to provide an adequate income for people to live on but we as a country cannot expect to ever go substantially beyond that. This is why privately operated pension schemes are becoming more and more important as we move into the 21st century. Indeed this has been recognised by some of the more far-sighted companies over the last number of years, which have been making provision through various pension schemes for their employees. Unfortunately most of those schemes did not go far enough and as I outlined earlier, they were a disincentive to mobility in the workplace. This Bill tackles those shortcomings which have become more and more evident of late.

While it would be churlish not to recognise that there is still a certain amount of poverty in this country, nevertheless where the vast majority of the population are concerned, they have seen a rise in their living standards over the last ten to 15 years. This increase in living standards breeds its own problems as in general people will live according to their means and their means dictate that they can afford certain items and have a certain quality of life which possibly they did not have heretofore. It is very difficult subsequently for anybody to endure a cutback in their standard of living and we have all seen many examples of this where a person loses his or her job and the consequent effects that this can have on that person and his or her family. In many cases they cannot cope with this change in their living standard and unfortunately sometimes resort to drastic measures. The same can be said of the person who is going into retirement. He or she cannot just turn themselves off over the course of a couple of weeks and readily accept that because they have now reached a certain age, they must do without some of the things that they enjoyed previously. This is why it is so important to have proper provision made for one's retirement years, so that their own level of standards can be maintained. Indeed, besides everything else, there are external social pressures which quite often dictate the standard that must be maintained.

I am also glad to note that the concept of equal treatment for men and women in occupational benefit schemes is an important core of this Bill. This principle of equal treatment is outlined in section 65 which states that "there shall be no discrimination on the basis of sex in respect of any matter relating to an occupational benefit scheme". Any scheme which includes a rule purporting to discriminate against a particular sex will have that rule declared null and void by the provisions of section 69. This discrimination in pension schemes does happen and has happened in the past and it is praiseworthy that such a determined effort is being made to stamp out this practice.

One of the most important parts of this Bill is the provisions as outlined in sections 63-79 relating to equal treatment. At present in private sector schemes employees are not usually permitted to join an occupational pension scheme until they have reached a certain minimum age, completed a minimum period of service, or reached a certain job status, for example full time. In some schemes a maximum entry age is also stipulated.

Where there are differences in treatment between men and women the likelihood is that eligibility conditions for females involve a longer service qualification and/or a higher eligibility age for admission to the pension scheme. The primary reason for such differences is to keep down administration costs because historically the incidence of employees leaving employment before age 30 is particularly significant among women. I think it is obvious that both on the merits of the case itself and the fact that it is explicitly required by the terms of the EC Directive, eligibility conditions governing membership of occupational pension schemes should be the same for men and women. This should be specifically provided for in legislation and I welcome the fact that this has been done in this Bill.

Occupational pensions schemes are free to pick their own pension ages for men and women. The fact that their time and pension under the State's social assistance system is payable from age 65 has had a major influence on the design of occupational pensions schemes where equal retirement age has been very much the norm. Where differences occur they generally mean that the normal retirement age for women is earlier than that for men. In view of the fact that the State social insurance system has a common pension age for men and women, I can see no reason for deferring the implementation of equal treatment in this area. Where changes have taken place to equalise retirement age for men and women the trend has been to equalise the later retirement age. I think this is reasonable and a practical means of achieving equality of treatment.

Where existing arrangements do not comply with the principle of equal treatment there will be cost implications in achieving equality. However, there may well be ways of mitigating or neutralising such costs in individual schemes, for example, by negotiating overall terms and conditions in a manner which complies with equality provisions but does not involve overall additional cost. In any event, there is no way that this should be put forward as an excuse to delay the implementation of the equal treatment concept.

Another advantage of proper pension provisions is that it encourages some people to perhaps retire a little bit earlier than they might have otherwise envisaged, but many of these people will possess skills which quite often are subsequently used for the benefit of the less well off and disadvantaged in their community. There is quite a number of people in this category who will always want some sort of work type challenge to occupy their minds and very many of these become involved in charitable organisations, local residents' associations and, indeed, a wide range of activities, which brings great benefit to the community at large.

This Government, or any Government, will probably never be in a position to provide a full and complete range of services that we might like and that is why it falls to voluntary organisations to fill a gap, and these organisations will be augmented by skilled, intelligent, retired people either through participation in existing organisations or through the initiation of new ones. I have seen that happen in my home city of Waterford.

One organisation that immediately springs to mind is the "Make Waterford Beautiful" Committee who have such people involved with them and they are doing a tremendous job to clean up and beautify Waterford, thereby making it a more attractive place for visitors. This obviously has a commercial benefit to tourism, etc. Then people are generating income, helping the economy, increasing our gross national product but costing the State nothing. They have also created employment in the jobs they have left which takes more people off the unemployment register. In this situation the retired person wins, the State wins, commercial enterprise wins and the unemployed win. I know this may sound like a simplification of the whole process and is perhaps a bit Utopian, but it is happening, perhaps slowly at present but it is bound to accelerate in the coming years.

I believe that this Bill can bring tremendous benefits and my own summary is that it will create a more mobile workforce, it will help employees maintain in retirement the standard of living they were accustomed to, it will create employment by encouraging earlier retirement through proper pension funding and it will benefit charitable and other organisations by the provision of retired people with no financial worries who have time to devote to such organisations.

This Bill tackles and I think succeeds in putting some order into a rapidly expanding area and the principal thrust behind the whole Bill is to ensure that scheme members are fully informed at all times of what is happening to their particular scheme and can have full confidence that their later years are being well provided for because of the minimum funding standards which are laid down. The concept of preserving pension rights for early leavers is an excellent one, while particularly the principle of equal treatment for men and women is most important, as I have already outlined. All in all, I feel that the approximately 550,000 people who will be affected by this Bill and their families, will be most appreciative of what the Minister has succeeded in achieving on their behalf through the presentation of the Pensions Bill 1990.

I will not speak for very long on the Bill but I want to make a few points. I look forward to watching the Bill going through the House because really I do not fully understand how the pensions scheme works at this time. I have not had an opportunity to read the legislation that has been put together down the years, and I am looking forward to understanding fully the gripes people have, and that I hear about regularly as I talk to my constituents.

The Bill sets out to try to provide a national pension system for everybody, and that is very laudable. I am sure any defects in the Bill will become obvious as we go through the various Stages. The Minister and his officials have to be commended for the amount of work they have done in drawing this document together.

I want to say a few words about my experiences with the business of pensions and social welfare since I became a Deputy in this House last year. It is an absolute minefield. There are problems I have seen as a rural Deputy which I would like eliminated. One of the things I noticed initially was that many people are convinced that pensions and social welfare assistance and benefits are available on patronage, and if they go to their local TD they will get assistance or benefits they are not really entitled to. It is a shame that a great many people are gulled into believing that. All reasonable people have to agree that is not the case and only where people are willing to tell lies and misrepresent the facts can they avail of benefits and assistance that otherwise they might not be entitled to.

I doubt very much if Members of this House are helping people to evade their responsibilities in that area. Certainly I would have nothing to do with anything like that, but the feeling abroad is that patronage is widespread. People come into my clinics and discuss with me proudly the possibility of getting a pension, a non-contributory pension which obviously they are not entitled to, and they expect me to use my influence to provide them with a little income each week. Possibly the reason for that is that the people who deliver the service in that area have always been very far removed from the population at large.

The ordinary person in rural Ireland has been afraid to some degree of the person who carries out the means test and as a result there has never been any great clamour for services to be made more available. People would prefer not to have to deal with social welfare officers at all. In seven or eight years' time everybody will be getting a contributory pension but in the interim the Ministers in charge should try to update the availability of information and services to the general public and get rid of some of these silly myths. If a person in my constituency wants to talk to somebody about social welfare, he or she finds it very difficult to get in touch with somebody who knows the facts.

The offices where information is available are generally quite far away. Officials who understand the regulations and conditions governing social welfare should be easily accessible. The personnel attached to the office in Carrickmacross spend much of their time on the road carrying out assessments and means tests. A person who is visited by one of these officials may want to have a further discussion but only one or two hours are available each week for such meetings. It is a case of never the twain shall meet after the initial visit. These constituents call to my clinic and there is interminable letter-writing in an effort to get information about something which could easily be sorted out if the people came face to face. We waste our time and energy seeking information which should be provided automatically in the first place.

The same applies in respect of information on unemployment assistance. People cannot get the information they require in their local office. A form can be filled in and sent to a distant office, but it is not easy to contact the person dealing with the matter. When people seek the assistance of politicians the notion that there is widespread patronage is further built up.

Very recently I came in contact with a widow whose reading ability was quite poor and whose understanding of the intricacies of pensions was very limited. Her husband died about 12 months ago and she informed me that in 1985 he had been given the option of joining the widows' and orphans' pension scheme. A letter arrived from his employer, a public service body, which he had difficulty in understanding since he also was not very literate. The letter stated that he would have to decide to opt in or out of the scheme before a certain date in 1985. He was not able to decipher what the letter was about and when he died his widow was informed by the employer that since he had not replied he had opted out. The result is that she has not got the pension she would be entitled to if the employer had decided that a lack of response meant consent. That is what should have happened in that case. I wonder how many other people have received letters of great significance which they could not understand.

I am concerned that such things can happen in the operation of pension schemes. There is a large number of people whose lack of literacy prevents them from gaining certain benefits to which they would normally be entitled. People who are delivering the service must be conscious of this. In the case to which I am referring, I am surprised that somebody who was dealing with this individual in the course of his work did not understand that he would not be able to handle it and offer him some verbal advice and assistance. It is an example of a tragedy to which there is no solution.

The Minister is attempting to tidy up an area which has changed dramatically since the previous legislation was enacted. Nowadays people move from one job to another and pension entitlements need to be clarified. This problem is being addressed in the Bill. I welcome the Minister's intentions and I hope that we will be able to examine the Bill in great detail and amend it where necessary.

It is with delight that I am here today to welcome this Bill. This legislation will go a long way towards providing necessary regulation in the very important area of occupational pensions schemes. The Bill provides modern, complete pension legislation which ensures that those in employment can look forward to financially secure retirement. It is essential that such security of pension rights be enshrined in legislation on the Statute Book. The only law on our Statute Book at present dealing with trust schemes is the Trustees Act, 1893, which, understandably, contains no provision at all in relation to 20th century schemes.

Recent company collapses, not uniquely confined to any one sector of Irish industry, showed how the pension schemes of redundant employees were either inadequately funded or the pension fund had been diverted and was not available to meet the pension rights of those employees. The three major companies which collapsed in recent years were the H. Williams Group, the Castle brand group in Nenagh and Roscrea Meats. Members of my family and some very close friends were affected by these collapses, in particular, by the collapse of the H. Williams Group. I saw at first hand the effect the collapse of the H. Williams Group had on employees who worked for that company for many years. The employees who worked for such a group did so in good faith, paid into the pension scheme and carried out their duties in the best manner possible but due to the sudden collapse of the group they were left with nothing other than whatever State pensions they could claim. I have seen the effect this type of collapse can have on families. If someone in receipt of a pension of £100, £150 or £200 a week suddenly loses that money it can have a devastating effect on him. The quality and standard of life of that person may have been based on the pension he received from the company he had worked for over a number of years.

It is our responsibility, as legislators, to ensure that the workforce are adequately protected by appropriate legislation. The Bill before us is essential in this respect as it will establish standards for occupational pension schemes, provide the framework for the supervision of pension schemes and implement the principle of equal treatment for men and women, which will meet the requirements of EC Directive 86/378.

I should like to refer to a number of sections of the Bill which I particularly welcome. Sections 26 to 38 in Part III provide for the preservation of pension entitlements. I know people who have paid into pension schemes for up to ten years but who, on leaving their employment, were not advised of what they should do with their pension. Prior to becoming a Member of this House, I paid into a pension scheme run by my employer but I was never advised about what my contributions were realising, what the company's contributions were realising and what my pension was worth to me at any given time. When I left that employment I received a cheque which I do not believe even met the payments I made into that scheme. I was given no other option but to accept that cheque. This is one reason I particularly welcome the provisions in sections 26 to 38 in Part III.

Sections 39 to 52 in Part IV provide for the introduction of minimum funding standards. I welcome this provision, which is a must for any pensions Bill. I also welcome the provisions in sections 53 to 57 in Part V which provide for the disclosure of information to scheme members. I should like some type of leaflet to be issued to scheme members, for example, a P60-type annual information leaflet which would show employees the total contributions they have made, the number of weeks and such other necessary information employees would like to have about their particular pension schemes.

I particularly welcome the clarification of the duties and responsibilities of scheme trustees. Previous speakers expressed concern about the scheme trustees and in particular, member trustees. I understand the Minister has already indicated that he will table amendments in this area on Committee Stage. I look forward to the debate on Committee Stage when those amendments can be teased out fully. The provision in relation to the establishment of the pension board, in sections 8 to 25, as a new statutory body is very necessary.

The measures I have referred to must be welcomed by all Members of the House, especially because of the magnitude of pensions schemes. Approximately £10,000 million is held in assets by investment companies for pension schemes and benefit payments are in excess of £250 million per annum, covering approximately 550,000 people. Of course, thousands more people are members of mixed insurance schemes. I question why these people were not provided for in the Bill.

Concern has been expressed from time to time by the employees of State and semi-State companies, the Port and Docks Board, etc., about superannuation pension payments and questions have been asked about the funds which are available to those employees from the schemes they have paid into. This is an area which could be easily cleared up and addressed and I wonder why it was not provided for in the Bill before us.

When people reach retirement age and apply for an old age contributory pension they are told certain anomalies exist in regard to their employment for previous years and their social welfare contributions by way of PRSI stamps. It is recognised — this has been thrashed out before in this House — that a number of anomalies exist in this area. I believe most people are unaware of how their class of contribution to social welfare during their working life may affect their contributory old age pension in later life. Many people believe that when they reach 55 and 56 years they are entitled to claim an old age contributory pension and because they have worked all their lifes they will get it at a recognised level. It is only when they apply, which normally is too late in life, that they are told their social insurance class changed during a particular period of their working life and they have insufficient stamps.

The other area is the anomaly that exists in relation to people who are caught in the 1953 situation in regard to stamps as well. This is as an important an area as occupational pension schemes and should be looked at. If it cannot be accommodated in the Bill that is before the House I would welcome regulations to deal with these anomalies.

I have no doubt about the amount of painstaking work and effort put in by the Minister, by the various committees that reported to him, by the authorities, the professionals in the pension investment area and, of course, the officers of the Department of Social Welfare in regard to this legislation. The result of all that work is this, the first Bill to regulate occupational pension schemes since the foundation of the State. I would like to congratulate them on the work they have done to date in that area.

I hope it will not take another 60 years to bring in the next one.

I hope not but we have not been in office for 60 years.

But for most of it.

In recent times, from 1982 to 1987, the Deputy's party had an opportunity of doing this.

We set up the board.

I will give the Deputy that but nobody can take from the present Minister, Deputy Woods, who has made great strides in regulating and bringing in legislation not alone in the pensions area but in the whole area of social welfare. He has to be congratulated on his efforts and work to date.

I would ask the Minister, if at all possible, when this Bill is passed through the House, to consider issuing a fact sheet to the 550,000 employees covered by the occupational pensions schemes so that they will know exactly what legislation has been introduced in this House and are fully briefed as to the type of protection proposed in this legislation.

In conclusion, the reason I particularly welcome this legislation is that in future there will be proper legislation on this area on our Statute Books, legislation which will give the workforce the confidence of knowing that appropriate and adequate provisions is being made for their retirement. I commend the Bill to the House.

I would like to start by noting the general welcome which this House has given to this important Bill. I want, on behalf of the Minister, to thank Deputies for their very constructive approach to the debate. It is clear that the spokesmen of all parties have carried out extensive research on the provisions of the Bill and this was reflected in the contributions made.

As I said, there has been a general welcome for the Bill. There are differences of view on certain of the provisions and these can be further discussed in detail on Committee Stage. It is clear, however, that all sides of the House are agreed that this legislation is of major importance. The implementation of the provisions will bring about a major improvement in the protection of workers who are covered by occupational pension schemes.

The importance of the Bill has been underlined many times in the debate with reference, in particular, to the numbers covered by occupational pension schemes, some 550,000 workers, and the scale of the assets of pension funds which recent estimates put at £10 billion. The important contribution made by the State to the development of occupational schemes has also been mentioned, both in relation to providing occupational pension cover to its own employees, as part of their terms of employment, and through the generous system of tax reliefs made available to such schemes in the private and commercial semi-State sectors.

In view of this it is essential that a comprehensive and effective regulatory system is in place to ensure that the pension rights of so many workers which have been earned and paid for over a working lifetime are adequately safeguarded. The overall objective of this Bill is to put such a regulatory system in place.

I am glad also that the general approach adopted in this Bill and its main provisions have been broadly welcomed by Deputies. Inevitably, of course, the main focus has been on what has not been provided for in the Bill. The three main issues identified in this regard were member trustees, equal treatment and the composition, operation and financing of the proposed new statutory board. Before going on to deal with these issues, I would like to refer briefly to the basis for occupational pension schemes.

It must be borne in mind that occupational schemes are voluntary and that employers in the private sector are not required by law to provide for such arrangements nor are workers required by law to be members of such schemes. There are no requirements either concerning the type of benefits to be provided or the level of benefits. In practice, employers and employees come to an agreement that arrangements for pension cover will be provided as part of the employee's overall remuneration package. The tax reliefs available in this regard provide a major incentive to both employers and employees to make such arrangements.

The main objective of this legislation is to safeguard the pension rights of the members of pension schemes. However, the main danger that has to be avoided in this area is over regulation or endeavouring to regulate everything at once without allowing schemes to progressively adapt to the new requirements and, above all, meet the costs involved in a planned way. Such over regulation could result in employers or workers deciding against setting up or having occupational pension arrangements or opting for arrangements that provide greatly reduced pension cover. It is against that background that I will now deal with the three issues I referred to earlier.

I would like to begin with the issue of member trustees. Reference has been made to the fact that a majority of the National Pensions Board were in favour of statutory requirements in this area. In the last analysis, however, the groups whose views are paramount in this regard are the employers and the employees. It is they who agree to the establishment of a pension scheme, who negotiate the terms of that scheme and who pay for the benefits to be provided. It is essential, therefore, that in relation to such a crucial issue as member participation in the appointment of trustees a way of providing for this is found which will be broadly acceptable to both these groups.

I do not propose to go into the details of the concerns of both trade unions and employers on the issue at this stage. However, I do believe that there is a need for a considerable amount of work still to be done in this area before a set of procedures can be devised to give members effective and meaningful participation in the administration of what, I must stress, in the last anaylsis are their schemes. This complex issue was dealt with in the report of the National Pensions Board in less than two pages. It was, however, recognised in the report that progress towards the fulfilment of the objective of member participation in the appointment of trustees should be gradual rather than immediate.

The Minister's approach is to work for a consensus on this issue over the next three years, the period referred to in the report. He will be asking the new statutory pensions board to encourage employers on a voluntary basis to provide for member participation in the appointment of trustees, through negotiations with their employees. The Minister has also, however, already indicated his intention to bring forward an appropriate amendment on Committee Stage to provide a statutory basis for member participation in the appointment of member trustees. This will be done by giving power to the Minister for Social Welfare at a future date to prescribe in regulations the arrangements under which this would be achieved.

In relation to equal treatment the Bill provides for full compliance with the terms of the EC Directive on this issue. The directive permits member states to defer compulsory application of the principle of equal treatment in relation to retirement ages and survivor's benefit at the latest until a further directive requires equality of treatment in this area. Proposals for such directive are under consideration by the Council of Ministers.

The Minister dealt at length in his opening speech with the issue of retirement ages. He stated in this context that he was studying the judgment of the European Court of Justice in the Barber case which, prima facie, appears to require equality in this area with effect from 17 May, the date of the judgment. In the light of his consideraton of this judgment the Minister will introduce an appropriate amendment on Committee Stage to reflect this new reality.

Equal tratment in relation to survivors' pensions creates problems for a number of reasons. The purpose of such benefits is to provide for survivors who had been dependent on the earnings of the insured person before his or her death. Traditionally, husbands have been the main breadwinners for the family, with the wife caring for the house and children. Survivors' benefits reflected this social reality and, accordingly, cover was provided for the survivors of males only. In applying the principle of equal treatment in this area it is important that we do not disimprove the provisions which are already in existence. Equal treatment, as pointed out, in particular by Deputy Ferris, can result in benefits being equalised downwards as well as upwards. As occupational pension schemes are voluntary it is not possible to require them to equalise upwards. The compulsory application of the principle of equal treatment could, therefore, result in existing cover for survivor's pension being reduced significantly if it had to be extended to both male and female employees.

The board pointed out in the fourth report that the cost of providing widowers' pensions relative to the cost of providing widows' pensions is not particularly significant because the mortality rate of women at all ages is lower than that of men and this effect is compounded by the fact that wives tend on average to be younger than their husbands. That would be the case in most schemes where the majority of employees are male and the female employees are in the younger age groups. However, there are 25,000 schemes here and in a proportion of those the situation may be very different with the majority of members being female and a high proportion in the older age groups. The board estimated that in such schemes the provision of widowers' pensions could give rise to a significant increase in overall costs. In such schemes compulsory application of equal treatment could lead to a reduction of overall pension cover on grounds of cost which would adversely affect the male breadwinners and their spouses.

The Minister does not propose to give legislative effect to equal treatment in this area for the present for the following reasons. First, as mentioned in his opening speech, it is difficult to justify imposing extra costs on schemes, which are not required by an EC directive, at the same time as they have to meet the additional start-up costs of complying with the other requirements in the Bill. Secondly, the Minister wishes to await the adoption of the next EC directive in this matter to ensure that the provisions in Irish legislation are fully in line with whatever terms are included in the directive. Making provision in national legislation to deal with this matter at a time when proposals for an EC directive dealing with the same matter have been submitted to the EC Council of Ministers would lead to greater uncertainty for schemes, as there would be no guarantee that the provisions in Irish legislation would ultimately be in line with those of the directive. If within two years there is no immediate prospect of the EC directive dealing with this matter being adopted, the Minister is committed to introducing appropriate measures requiring equal treatment in relation to survivors' pensions.

I would now like to refer to the third main issue raised, which concerns the operation, composition and financing of the pensions board. The National Pensions Board did propose that certain functions should be reserved in legislation to the chief executive officer. The main objective would be to allow effective action to be taken as soon as possible in relation to problem schemes. This, however, would require that provision be made for the chief executive officer to be directly responsible to the Minister for Social Welfare in respect of these functions while at the same time being responsible to the pensions board in respect of other matters concerned with the implementation of the Pensions Act and having to report generally to the board on the implementation of the Act. Such a procedure could give rise to difficulties and possible duplication between the Department of Social Welfare and the pensions board and result in the chief executive officer having to report on a regular basis to two authorities.

To avoid the board having to get involved in detailed administration it will be possible for the board to delegate day-to-day administration to the chief executive officer subject to the board's overall control in this regard. This is allowed for under paragraph 245 of the First Schedule. Given the enhanced role of the board in this regard it is also essential to avoid membership of the board being too high as this could lead to delays in decision-making and in the general effectiveness of the board. For that reason the Minister opted for a board in which each of the interests involved in pensions would be represented and the total membership would be a chairman plus eight members. In the light of the views expressed in this debate, and representations made since the publication of the Bill, the Minister is reviewing the membership of the board with a view to a small increase in membership.

Deputy Flaherty also referred to exemptions provided under the Bill for certain schemes. Some of these were outlined in the Minister's speech. Section 36 (1) enables the Minister for Social Welfare, with the consent of the Minister for Finance, to exclude schemes by regulation from the requirements in Part III if he considers that the benefits of those schemes are, in overall terms, no less favourable than those provided under that Part. The intention is to use this enabling provision to exclude those public sector schemes which (a) provide preserved pension benefits on standard public sector lines, and, (b) are members of the public sector transfer network.

The standard public sector arrangements for preservation of benefits provide that: a member with at least five years pensionable service is entitled to preserved pension of 1/80th of pensionable remuneration per year of service subject to a maximum of 40/80ths, or one half of such remuneration. He or she is also entitled to a preserved lump sum of 3/80ths of pensionable remuneration per year of service subject to a maximum of one and a half times pensionable remuneration. A preserved death gratuity equal to the lump sum payment is provided in the event of his or her death in addition to a preserved spouse's pension of one-half his preserved pension entitlement which could have been provided in the event of ill-health or retirement. The pensionable remuneration for this purpose is the actual remuneration of the member at the date of leaving service up-rated in line with all salary increases awarded to the grade from which he or she retired.

There is also in existence a comprehensive transfer network under which service is fully transferable for pension purposes within participating organisations. Almost all schemes in the public sector operate preservation rules on these lines. In most cases a knock-for-knock arrangement exists whereby full credit for previous service is granted but no money changes hands. When these arrangements are compared with the minimum requirements under the Bill one will find that, overall, they are more favourable. The qualifying service requirements are of the same length, five years. The method of revaluation under the public sector arrangements is linked to salary increases which is a reasonable method of ensuring that early leavers are treated fairly in comparison to members who stay in the scheme until retirement age. The adequacy of these arrangements was fully recognised by the National Pensions Board in formulating their proposals in this area.

Under the provisions of the Bill, revaluation of preserved benefits is only required for defined benefit schemes up to a maximum of 4 per cent per annum. The public service arrangements are linked to salary increases. In this context it should be noted that very few schemes in the private sector revalue preserved benefit entitlements of members. Admittedly transferability of service is confined to schemes operating within the public sector area but full credit is granted for previous service. Under the Bill a member of a funded scheme is entitled to have his preserved benefit entitlement transferred to a new scheme of a new employer or to an annuity bond. Such transfer values need only reflect the actual equivalent of the member's preserved benefit revalued only up to 4 per cent maximum. All in all, it is considered the public sector arrangements whereby preserved benefits of early leavers are fully indexed in line with salary increases and full transfer of service available within the public sector, are overall more favourable than the minimum requirements laid down in the Bill.

With regard to the new minimum funding requirements, section 51 enables the Minister for Social Welfare, subject to the consent of the Minister for Finance, to exclude by regulation certain schemes or categories of schemes from the funding requirements of Part IV. The grounds on which such exclusions may be made are stated in the section as being schemes, essentially, whose benefits are, or may be, paid from the Exchequer. This section will provide the enabling basis for excluding unfunded public sector schemes and certain funded schemes principally in non-commercial State-sponsored bodies.

With regard to unfunded schemes generally the National Pensions Board stated that it would be illogical, following the introduction of a minimum funding standard, to allow unfunded schemes to continue in their present form and that they should, therefore, be required to fund at the minimum level for future service. However, it recommended that an exception of this rule should be made for public sector unfunded arrangements whose financing is based on the State's permanent and continuing ability to discharge its obligations as they arise. Having examined these proposals it has been brought to the Minister's attention that certain funded schemes of non-commercial bodies were in a similar position. Although the pension schemes had funds, the security of the pension benefits is ultimately dependent on the Exchequer. For similar reasons therefore, these schemes are also being excluded.

With regard to the proposed disclosure requirements, the Minister already outlined in detail the exemptions recommended by the National Pensions Board. For example, it is not appropriate to obtain an actuarial valuation for a defined contribution scheme under which the member's ultimate benefits are determined by reference to the amount of defined contributions and the investment return earned on them. Death benefits in respect of members are normally insured on a year by year basis. It would be inappropriate to have annual reports and audited accounts in respect of such schemes. Members will have the right to an individual statement of the amount of any such benefits payable in the event of death.

Deputy Flaherty also referred to the proposed levy on pension schemes provided for in section 25. The sole purpose of the proposal fee as stated by the Minister, is to meet the administrative costs of the new board. The scale of fees and the basis for their determination will be set down in regulations made under this section. These matters will be decided in consultation with the new board. As the Minister pointed out in his speech it is his intention that the full cost of the board will be met by the proposed levy on schemes themselves. This is what was recommended by the National Pensions Board. I do not envisage asking the general taxpayer to fund this new regulatory regime.

The intention is that the new board would be a relatively small organisation. Their main function will be to deal with problem cases which do not comply with the new standards. These would represent only a minority of the 25,000 or so scheme members themselves and their representatives to ensure that their schemes complied with the legislation. The costs of running such a board, therefore, should not be significant. I certainly do not believe it will represent an undue burden on pension schemes whose annual income is now put at over £1 billion.

Deputy Byrne inquired how the new board would operate. As I already mentioned, it would deal with problem cases. It is envisaged that a member's remedy for non-compliance with the new requirements would initially take the form of an approach to the trustees either directly or through his trade union or staff representative. If this approach or informal contact does not produce the desired result the member, or his-her trade union, could make a complaint to the board which would then investigate the allegation on the member's behalf. It is hoped that the involvement of the pensions board would normally be sufficient to achieve the required action. If this course of action fails to provide satisfaction, the board would then use their power to take legal proceedings on behalf of the member against the defaulting trustees or any other culpable person.

The provisions of the Bill will override anything contrary contained in the scheme's own rules. If a dispute arises concerning the application of a specific provision a person may apply to the new board for a ruling on the matter whose decision shall be final and may only be appealed to the courts as a point of law.

With regard to qualifying service conditions for preservation of benefits, section 27 provides that a member who has five years qualifying service of which at least two such years occur after the commencement date shall qualify for preserved benefit. The pensions board recommended an age related formula, five years for those under 25 years reducing by one year for each year in excess of that age, subject to a minimum of two years for those aged 28 or over. The current practice in both public and private sector schemes is for the vesting of rights to preserved benefit after a period of five years. The Minister considered that on grounds of simplicity a non-age related formula would be more administratively convenient for schemes.

The provisions in the Bill will allow existing members with three years service to qualify after 1 January 1993 for preserved benefit irrespective of their age. Under the board's recommendation members aged 27 on that date would have to wait longer to build up such an entitlement.

Deputy Byrne also referred to section 34 which enables the trustees in certain circumstances to be prescribed to effect a transfer payment without the consent of the member. This provision is designed to reduce the administrative workload of schemes administering an ever increasing number of small preserved benefit entitlements. Otherwise, unless those leaving requested a transfer payment, records would have to be kept in respect of all leavers. In employments with high turnover of staff a situation could arise where records in respect of leavers could exceed those in respect of persons who stay in the job. It is proposed that, in the case of small preserved benefit entitlements, that is those in respect of short periods of service, say, four or five years, the trustees of the scheme should have the power to transfer their liability to an approved annuity bond. This would in no way cause any diminution in the member's preserved benefit entitlement.

A number of other issues were raised by Deputies during the course of the debate which will be fully considered by the Minister before Committee Stage. On Committee Stage there will be an opportunity to examine the provisions in detail and to consider any amendments to improve the Bill. The Minister has already indicated his intention to bring forward a number of amendments in response to representations made to him in the House and from other sources.

I should like to thank all the Members who contributed so constructively to this Bill.

Question put and agreed to.

When is it proposed to take Committee Stage?

It is proposed to take it next Wednesday, subject to agreement between the Whips.

Committee Stage ordered for Wednesday, 6 June 1990.