Gabhaim buíochas leis an gCathaoirleach agus don trí bhall den chomhchoiste atá anseo inniu as ucht éisteacht linn.
I wish to address the committee on the minimum funding standard, MFS, and its effect on the pension freeze in the case of many semi-State companies, including ESB pensioners, who have had a pension freeze for ten years. There is a triple lock on pension increases to be considered. In some cases, as well as the triple lock, any proposed increase is subject to employer approval as well. These locks are: scheme solvency; minimum funding standard; and actuarial opinion and assumptions. This has resulted in semi-State company pensions having a freeze on pensions for a ten year period, which is a very significant portion of a pensioner’s remaining lifetime, while being denied any compensation for cumulative consumer price index increases over the period. What affects pensioners is the consumer pensioner price increase, which would be even greater. We do not buy Ferraris.
Scheme solvency has been impacted by the pension levy which has resulted in semi-State pensioners burdened with a levy on their pensions for life and should the pensioner pre-decease a spouse, the levy would also apply to the spouse’s reduced pension, half-pension, of what the pensioner had for the spouse's lifetime.
The minimum funding standard as applied in Ireland needs greater flexibility in reserve calculations and on quoted costs of annuities which can overstate the costs of annuity purchase. This has been stated by the Minister but we are waiting for her to effect any amendments to the Bill going through the Dáil at the moment. In fact, I am amazed the Bill, as it currently stands, has only two items on pensions and they are timing items. There is absolutely nothing else in the general scheme. I cannot understand why that has happened. The ability of the State to apply levies by means of stamp duties or similar charges to pension funds, which we should remember are the private property of the scheme members, is legal but morally indefensible. It would not encourage those who may be auto-enrolled in future proposed State-employer-employee schemes to remain in them if the funds are liable to be levied in times of financial stress.
Provision in actuarial assumptions for annual percentage increases in pensions which are known will not to be paid create even further liability on pension funds and push the funds further into apparent deficit. Semi-State workers employed before 1995 in many State organisations differ from other employees in that a condition of employment was obligatory membership of the company pension scheme and exclusion from qualification for a State contributory pension. It is implicit that the first tier benefits available to State contributory pensions are included in semi-State employee and pensioner benefits. The pension freeze has ignored the fact that since it started in 2008, an approximate 9% increase in State contributory pensions took place during the pension freeze period.
When I joined ESB there was a pension promise, which was that pensions would reflect the salary of the job the person left. This pension promise, implicit in the State pension schemes, has not been honoured during the last ten years and we ask that the committee work to give legal effect to the pension promise and to vindicate the legitimate expectations of pensioners.
All of the above factors have impacted to the detriment of semi-State pensioners and need to be addressed in amendments to the Bill. The omissions mentioned in the general scheme are of great concern to pensioners as is the fact semi-State companies and employer organisations have lobbied to have certain provisions of the general scheme removed or not included in the Bill.
In summary, the Minister said proposed amendments were intended to be introduced on Committee Stage to allow an employer to walk away after a 12 month notification period with a possible funding obligation by the employer to be determined by the Pensions Authority. This would be insufficient to provide adequate protection for pensioners, because an employer could walk away after 12 months and abandon the pension scheme. We urge the committee to make efforts to have these protections included in the Bill.
I will summarise the three contributions in seven points. First, legislation is necessary to enable representation and arbitration for pensioners. As Ms de Buitléir said, our groups have been trying to engage with everyone and we have nowhere left to go. Representation is no good without arbitration. Second, a definition is needed to identify what body should have the ultimate responsibility for funding deficits in public sector companies. Third, flexibility in the minimum funding standards must be provided to avoid overstatement of liabilities in the pension funds which result in the pension freeze. Fourth, the extension of employer debt should include a balance of funding proposals beyond a walk-away period of 12 months. Fifth, legal effect must be given to the pension promise to meet the legitimate expectations of pensioners. Sixth, it is necessary to have a constitutional prohibition on the imposition of levies or similar charges on pension funds legitimately set up under the legislation for the pension auto-enrolment proposal. Tomorrow, we will hold a constitutional referendum on blasphemy, an issue that does not affect many people. Pension legislation affects hundreds of thousands of pensioners of semi-State companies. I do not know what has happened to the proposal to amend the Constitution. Perhaps Deputy O'Dea can comment on that. Finally, pensioner representative organisations must be included in consultations to identify funding standard reform options and provide balance and equity.
One of the big problems we face is that organisations and State agencies will agree to speak only to individual pensioners. Individual pensioners do not have the ability to represent the entire body of pensioners. It is vital that organisations representing pensioners are allowed to engage in representations. Pensioners are facing IBEC and semi-State corporations and, as such, we cannot be represented by individuals.