Many points were raised and unfortunately our time has been cut very short. This is a rebalancing effort. We hope nobody has to suffer serious cuts in their pensions. If, as Deputy Ó Snodaigh stated, the fund is highly funded, which a significant number are, the consequent reduction would be far smaller than anything outlined in the legislation because it will be a repetitive process until the final distribution is made. A tone is coming across that this is mandatory whereas it is the final outcome for heavily underfunded schemes, down to the situation of a double insolvency.
On the issue of representation of pensioners, as I stated last week and on Second Stage it is a labour relations issue and, to be clear, it must be considered in the context of industrial relations legislation. I stated on Committee Stage the matter can be explored in this context, and following discussions on various Stages of the Bill the officials met with pensioner representatives this week to tease out what way it could be done. On foot of this consultation I will write to the Minister for Jobs, Enterprise and Innovation, who has responsibility for industrial relations, to see what can be done. It is not part of this legislation and I want to be clear on this. I am perfectly happy to do this.
I want to be clear the Bill does not give any entitlement to trustees, as may have been implied, to reduce pensions to €12,000 or any other figure. This is in the context of a restructuring where we are trying to save the maximum amount for all pensioners in a rebalancing way where the pensioners with the highest level of pensions contribute the most. This is the purpose of what we are trying to do and why at the outset on Second Stage Deputies from various parties broadly welcomed the Bill and stated they were supportive of it.
With regard to the 20% and the €60,000, I set out for the Deputies this is the advice made available to me and with regard to bringing forward legislation. To ignore legal advice would risk the legislation being ineffective. This reform is badly needed and has not been addressed before despite the pensions crisis.
I understand the points made by Deputies Daly and Shortall, but we are discussing people who do not have a contributory pensions record. I explored the history of this and the fact is in certain semi-State bodies people did not pay a contribution for a contributory State retirement pension. The legislation per se has nothing to do with the State retirement pension except, as Deputy Ó Snodaigh stated, when I received the Mercer report and we had all the other consultations I mentioned. Deputy Ó Snodaigh has studied the Mercer report in detail and the proposals on the ceiling were far lower than what I have been able to achieve. I have achieved double what was set out.
One must bear in mind the median pension in the private sector is €11,000 and this is covered. People in the private sector are most likely to have made State PRSI contributions to qualify for a State retirement pension. For decades employees and management in semi-State companies did not want to make contributions, and this was probably an advised, considered decision at the time it was made. As a consequence of these employees not qualifying for a State retirement pension because they never contributed to it - and pay 0.9% while by and large semi-State companies as employers pay up to 3% whereas the actual contribution is 14.75% - their average pension is €22,000, which is much higher than the €11,000 in the private sector. This situation was a feature of semi-State companies and was agreed until it was changed in 1995 and full contributions became the norm for new employees. The cost to buy back a State pension contribution is approximately €300,000.
Deputy Shortall raised the issue of a pensioner couple and she is right. I have not included it in the calculations. In the case of a pensioner couple where there is a €12,000 pension and an entitlement to a State retirement pension, the pensioner couple would receive €12,000 and the dependent pension payment. We are not calculating this because when pensions are paid by a firm, whether semi-State or private, no consideration is given in the calculation to the relationship or dependency status of an individual member of a pension fund. It is simply not possible to work this in our system. Is there a cost to the State of providing for a dependent pension? Yes there is, but it is one every party in the House is happy to pay because it is a recognised cost in the State system of providing for pensions.
It is not necessarily an explicitly recognised cost in private pension schemes other than when somebody becomes widowed who was formerly a pensioner. That is something that applies in these cases.
I thank all of the officials who have worked hard on this legislation which is in a complex area in which no legislation has been introduced for a long time. I hope it will be of significant assistance in getting more pension funds over the line in the context of their sustainability and viability. I also thank all of the Members who contributed on the various Stages, particularly the spokespersons on social protection. Everyone made a valuable contribution. I referenced the preparation of guidance and guidelines and indicated that we would examine a number of issues. We will also contact the Department of Jobs, Enterprise and Innovation regarding a right of audience for pensioners, an issue which was raised on Committee Stage.