This amendment provides that the Minister for the Marine may, with the consent of the Minister for Finance, pay to the trustees of certain pension schemes moneys in respect of certain liabilities that have arisen prior to the relevant vesting day. This provision applies only to port companies to be established under this Bill.
On Committee Stage I touched briefly on the pension liabilities of harbour authorities. Historically, they operated a "pay as you go" system for pensions rather than having a specific pensions fund. This system is no longer in accord with acceptable standards. Under the provisions of the Pensions Act, 1990, and this Bill harbour authorities must build up pension funds. This is a costly process and while some authorities are in the process of building up a fund others are only beginning to do so now and it will take some time for them to put fully funded funds in place. In particular, the Dublin Port and Waterford Harbour authorities have serious shortfalls in their pension funds.
The Government is taking action to secure pensions and to ensure that harbour authorities build up the necessary funds. Consultants have been employed to conduct a comprehensive study of the financial status of harbour authorities, including the long-term funding requirements of the ports and how these are to be achieved taking due account of measures to meet the appropriate funding standards for pension schemes under the Pensions Act. I expect that this study will be available shortly.
If it is found that some harbour authorities cannot build up the required funds within the timescale set out in the Pensions Act it will be necessary to remove from the scope of Part IV of that Act those pension schemes or parts thereof which do not meet the required funding standard. The purpose of this amendment is to allow for this. The effect of removing pension schemes from the scope of the Pensions Act is that such schemes will avail of Exchequer cover. In the unlikely event that port companies cannot meet their pension obligations the State will undertake to do so.
This provision will also allow for the payment of moneys by the Exchequer into a pension fund to build it up. This is an enabling provision and will only be invoked in the direst of circumstances where the Minister for the Marine and the Minister for Finance are satisfied that an Exchequer contribution towards a pension fund at a port company is necessary. Any such contribution will be made only on foot of a plan agreed by the Minister for the Marine and the Minister for Finance with the company and the trustees of the pension scheme which provides for building up the pension fund over a specified period.
The policy will be to minimise the Exchequer exposure in this regard through ensuring that every effort is made by harbour authorities and port companies to provide for the funding of pre-vesting day pension liabilities themselves. The purpose of this amendment is only to provide a back stop guarantee against the eventuality that certain harbours may be unable, through trading performance or closure, to meet their pension liabilities. Exchequer intervention will occur only in the direst circumstances.
Harbour authorities will be expected to make every effort to fund all pension liabilities through improved trading, asset sales, etc. The boards will be required to provide in their strategic plans for a mechanism by which funds may be built up to meet the required funding standard under the Pensions Act. The Exchequer's back stop guarantee will operate only until such time as the boards can reasonably attain that status.
There will be a stringent case by case approach. For example, not withstanding the text of the amendment, there will be no question that certain categories of liabilities, such as pre-vesting day liabilities, will be automatically Exchequer funded for all bodies.
The intention is that when the study which has been commissioned into the current and prospective viability of harbour authorities is completed I will consider further, in conjunction with the Minister for Finance and the harbour authorities, how best to put the necessary measures in place to enable the pension schemes to meet the required funding standards under the Pensions Act. The DKM study is now almost completed and the consultant's report and recommendations should be available shortly.
Amendment No. 27 provides that moneys required by the Minister for the Marine or the Minister for Finance under this section "shall be advanced out of the Central Fund or the growing produce thereof". In this regard moneys will be required by the Minister for Finance to enable him to meet his obligations under subsection (5) and moneys may be required by the Minister for the Marine in accordance with the new subsection (9).
The purpose of amendment No. 62 is to provide that, in respect of harbour authorities which remain under the Harbours Act, 1946, moneys may be made available by way of grants or loans to cover pension liabilities in respect of pension schemes made in accordance with section 151 of that Act where the harbour authorities concerned do not have the resources to cover such payments. The Harbours Act, 1946, does not make provision for the payment of State grant assistance to harbour authorities towards pension costs. This provision will provide emergency cover for pensioners where a harbour authority cannot pay pensions out of its own resources. It covers the authorities at small harbours where one or two persons only are employed.
The intention is that the section will remain in force for a period of not more than five years after the commencement date of the section and that moneys, if any, made available will be in respect of a period of 12 months only after which time the matter will be reviewed.
The ultimate aim of these amendments is to ensure that existing harbour pensioners and the employees of harbour companies and commissioners will have their pension entitlements honoured in full and, if necessary, the Exchequer will provide the necessary finance to achieve this. The primary responsibility for ensuring that pension funds are adequate for this purpose will continue to rest with the individual harbour companies and commissioners.