On behalf of the joint committee, I am pleased to welcome Councillor Philip Cantwell from Meath County Council who has come before the committee to make a presentation on the operation of an income continuance scheme for certain employees of Tara Mines. Councillor Cantwell is accompanied by Mr. Oliver Hilliard, a brother of our late colleague and former Member, Colm Hilliard, and Mr. Dermot Mooney. I also welcome other members of Councillor Cantwell's group, who are in the public gallery. I understand that the group includes Councillor Andrew Brennan, who is deputy mayor of Navan, and Ms Eilish Hilliard, who is Mr. Colm Hilliard's widow.
Income Continuance Schemes: Presentation.
Deputies
She is Oliver's wife.
I apologise. They are all welcome.
Before we commence, I remind members of the parliamentary practice that they should not comment on, criticise or make charges against any person outside the Houses or an official either by name or in such a way as to make him or her identifiable. Members who wish to make a declaration in respect of any matter being discussed may do so now or at the beginning of their contributions. They are also reminded that if there is a possibility of there being a conflict of interest, they should make a declaration of interest now or at the start of their contributions.
I draw witnesses's attention to the fact that members of this committee have absolute privilege but that this same privilege does not apply to witnesses appearing before it. This point applies to Councillor Cantwell and it is important to note. While it is generally accepted that witnesses have qualified privilege, our committee is not in a position to guarantee any level of privilege to witnesses appearing before it. I am sure Councillor Cantwell, who is an experienced politician, knows the remit of the committee and what is meant in that context.
The group furnished us with considerable information. We met some members of the group on an individual basis and we are fairly well aware of the issue involved. If we are not, it is not the fault of the members of the group. Given that we already received substantial written documentation from the group, we will hear a presentation of the main points relating to the issue. As a committee, we gain most from question and answer sessions aimed at obtaining information that may be relevant to where the representatives consider the scheme is deficient and issues of that nature which might arise. I invite Councillor Cantwell to make his presentation.
Mr. Philip Cantwell
It is an honour to be here. I thank the committee for affording this opportunity to members of the disabled workers of the company to present the case of the awful position in which they find themselves.
I am sure members know that Tara Mines is an underground deep mine which produces 10% zinc, 3% lead and 0.5% silver. I started work there in 1974 as the engineer involved in building the mine. It went into production in 1978. Each day we move approximately 15,000 tonnes of rock and ore and the company produces approximately 2.5 million tonnes per year. It is a profitable mine, which, on average, makes €10 million profit per month. The reason for that level of profit is that with the emerging economies of India and China, the price of the product, which would normally be $1,000 per tonne, is, $3,000 per tonne. It is a profitable company and in that respect I am glad for the people of Navan.
Some ten workers were killed in Tara Mines and some 100 workers were disabled there. Fortunately, the people in Tara Mines, particularly the former personnel manager Mr. Tommy Byrne, introduced a pension scheme for the workers. It was a contributory scheme. Employees contributed 5% of their salaries to the scheme. Fortunately, the company put in place an income continuance policy and this was also paid for by the workers.
The Minister for Social and Family Affairs, Deputy Brennan, recently replied to a parliamentary question tabled by Deputy Boyle on such schemes. The Minister referred to two types of income continuance schemes. He said that there is a scheme for sole traders and also a scheme sponsored by employers.
In the case of Tara Mines, the workers paid for the scheme by paying a contribution towards it each week. This is where many of the problems arise. I sent the Chairman a copy of the hourly paid pensions booklet. The booklet includes a question relating to who pays for the benefit and the answer states that both the employer and the company do so. The booklet also states that the total contribution payable by the employee each year, through deductions from the employees' earnings, is made up of two parts, namely, part A, which is 5% of an employee's pensionable salary — this is the contribution for the pension — and part B, which is the cost of the insurance scheme. The latter is an amount equal to the cost incurred by the company on the employee's behalf in providing the benefits under the income continuance plan. The workers paid for the income continuance scheme and I sent the Chairman a copy of the income continuance plan.
Tara Mines is named as the insured, so when my colleague Mr. Hilliard became disabled and wanted to check anything, no information could be released to him without the consent of Tara Mines. We met the manager of Scott Hibernian, which was previously Norwich Union, and he had a direct, definite instruction to the effect that nothing should be given to Mr. Hilliard. How, therefore was Mr. Hilliard in a position to discover what were his entitlements when the employer, who put his name on the policy, gave definite instructions to tell him nothing?
The committee will also know that when the policy was taken out in the 1980s, inflation was 20% to 22%. Mr. Tommy Byrne set up the scheme for the workers and for the company. There was no point in half cooking the bread or providing half a benefit. Some of our colleagues were injured and disabled at 20 or 30 years of age, so why give something that was supposed to be a remedy and not provide for inflation? That is why, when they took out the policy, the escalator provided stated "a 5% per annum compound, applicable to income benefit and pension premium".
The problem did not arise when Mr. Hilliard or his colleagues were disabled. It only arose when he reached 65 years of age and discovered that the years at work were added to the years when he was disabled, but the pension is based on the wages when he was injured 30 or 40 years earlier. Despite all our efforts in the past 20 years, the people who established the pension scheme say that the rules only provide for this man to receive a pension based upon the wages of which he was in receipt when he was disabled. The result is that it is only a pittance.
The reason we come before the committee today does not just relate to the Tara Mines workers. We understand from the Watson Wyatt report, which investigated income continuance, that 238,000 workers are insured under income continuance plans. Some 6,000 of those are disabled. If somebody is allowed to sell bread or sugar and there is no legislation to decide the quality thereof, then, as is the case at Tara Mines, the employer can have a field day.
What has the employer at Tara Mines done? I do not blame Tara Mines because it is a company to make money. It does so within the rules that are laid down by these Houses. However, the people who were supposed to protect us are the brokers, the trustees. The latter left the interpretation of the rules open to such ambiguity that the employer can take Mr. Hilliard's pension and literally there was nothing that could be done.
I will give the committee a further example. I became disabled in 1986 and had two operations on my spine. I had been paying voluntary contributions, AVCs. When I went to check with Tara Mines what pension I would receive, the answer was that it would equate to 32 sixtieths of the salary I received in 1986, even though the actual pension contribution was increasing. I then checked the position further. I will be honest and say that I am not badly off. Mr. Oliver Hilliard and I might both have received €30,000 but my wages were approximately £27,000 basic and £3,000 bonus. Mr. Hilliard's was £10,000 basic and £20,000 bonus. When he became disabled, his pension and insurance were based on his basic pay.
I went to see my colleague, Mr. Michael Sheils, who paid for this insurance. He will be 65 in 2014 and according to this he will have the grand total of €88 per week. However, if Mr. Sheils got what he paid for, he would receive €270 per week. That is roughly €200 per week more than what Tara Mines and Irish Pensions Trust stated he was entitled to. Therefore, €200 per week is going AWOL. Where is it going? It is going to Tara Mines. It is a subsidy. We cannot accuse Tara Mines of taking his money. It is going in as a subsidy to the pension fund. If one had to buy the pension of €200 that Michael is being left short in today's market, or in 2014 when he reaches 65 years, it would cost that one man almost €200,000 to buy at present. We have 100 guys with a disability. Where is all this money going? It is going to one place only; it is a major subsidy to Tara Mines and such is happening all over the country.
The other workers for whom we are here today are those whose cases involve one or two persons. They would not be able to fight. We have fought this. I would not be able to do this were it not for the support of Mr. Oliver Hilliard, Ms Eilish Hilliard, Mr. Michael Sheils and all those present today. We are fighting, not for €1 of benefit from the employer but simply for the €1 that we paid for. Although one would hardly believe it, that is the case.
Had Tara Mines been left do what it was doing with the help and co-operation of Irish Pensions Trust, which was, as the Minister for Foreign Affairs, Deputy Dermot Ahern has stated, interpreting and applying the Tara Mines pension scheme strictly as per the rules and if it cannot be accused of doing anything wrong, the question is: who wrote the rules and why did they write rules by which this man is being cheated out of his pension? It is an awful situation.
Furthermore, the policy included a death in service benefit. Most of our workers who have cancer, heart attacks, heart complaints or die young are entitled to what is called death in service benefit, but, according to Tara Mines and the brokers, whether that man Michael who was approximately 40 years of age died at 40 or 64, his family also would receive a frozen death benefit of €31,000. Therefore, they were freezing his pension and death benefits. This is totally at variance with what was being provided for by the policy and what the workers paid for.
What else has happened to the workers in Tara Mines? Unknown to us, Tara Mines had our employment terminated; in other words, one had a line drawn through one's name. In income continuance policies it is normal procedure that one must remain an employee. How was Mr. Hilliard who, like me, had a line drawn through his name going to qualify for death in service benefit? He was no longer an employee of Tara Mines, yet he qualified for death in service benefit. Suppose he got a job with Guinness. Would Tara Mines pay a death in service benefit? It would not. When he questioned his benefits, he was told by Irish Pensions Trust which is the expert in this that he was a deferred pensioner. A deferred pensioner is somebody who leaves the company but leaves his or her pension after him or her. Mr. Hilliard did not leave. He is still putting money into his pension fund, yet according to Tara Mines and Irish Pensions Trust, he is a deferred pensioner.
I tried to pay AVCs which the committee will be aware that the Government is trying to encourage workers to pay. I tried to do this with my few pounds. A couple of weeks ago I discovered a letter from Tara Mines to Eagle Star. It states:
Dear Mr. Murphy,
On checking our files I confirm that the employment of Martin Philip Cantwell (known as Philip Cantwell) was terminated with effect from October 31st, 1986 with Tara Mines Limited.
The Trustees are therefore not in a position to approve an AVC plan for Mr. Cantwell after his termination date. I note from the copy proposal that there were other AVC proposals made subsequent to 1986, although not with your company, which the Trustees would also not be in a position to approve.
First, they are trying to create a situation where Oliver Hilliard or Philip Cantwell is not an employee of Tara Mines. I have now been told I cannot pay AVCs because they have terminated my employment. It gets better.
In 1999, we protested outside the offices of Irish Pensions Trust, which, to distance itself from Tara Mines, set up the election of workers trustees. However, Mr. Hilliard, others and I were told we would not be able to vote in the election of workers trustees because Tara Mines had terminated our employment. Not only could we not vote for the trustees but I could not be elected to represent the workers. It was a sham. The company also moved the income continuance policies of other workers to another company and insisted their employment had not been terminated and that as such they had the right to vote. No line was drawn through their names but we, who had many years of service, were not given a vote.
The six-year term of office of the then trustees expired at Christmas, requiring that another election be held. Mr. Hilliard was by then a pensioner. I received a telephone call from Mr. Hilliard asking if I had received a vote because he, as a pensioner, had received one direct from Mercer. Those of us on income continuance did not receive votes. On 29 December, I contacted the officials in Mercer who were organising the election, the offices of Tara Mines, the Pensions Ombudsman and the Pensions Board to tell them that disabled voters had not been given votes. I was informed that they had been issued on 3 January and we received them on 5 January for an election due to take place on 6 January. What had happened? Why was I entitled to a vote in 2006 when I had not been so entitled in 1999? I had not changed.
I apologise if I am taking rather long to outline the matter. Without protection, workers on income continuance are at the mercy of employers, be it Shell in Nigeria or mining companies in Africa. They are lambs to the slaughter and are fair game for these companies, which take advantage of their situation.
We are appealing to members to examine the income continuance schemes, as recommended in the Watson Wyatt report, and to regulate in that regard. We do not care if the Department of Enterprise, Trade and Employment or the Pensions Board takes responsibility for these schemes. One would think that an agency selling pensions and income continuance schemes could better explain how it operates. At present, an employer can take as much or as little from an income continuance scheme for which a worker has paid and he or she can do nothing about it or even submit queries. It is difficult to believe that this is happening in 2006.
Members will have received copies of the pensions rules book and staff rules book which states — this relates to me and the income continuance scheme — "It will be paid by the company at its discretion to you as staff". I do not receive Christmas cards from Tara Mines as a result of my attempts to draw workers' attention to what was happening. This is the type of information being given to employees. It applies to staff and those paid an hourly rate. I would be happy to answer any questions which members may wish to pose.
I thank Mr. Cantwell for his succinct presentation and for the documentation he forwarded to the committee secretariat. Many members are aware of the situation outlined by him, which is anomalous. It appears that income continuance schemes are not covered by the Pensions Act and, as such, do not come within the purview of the regulatory framework of the Pensions Board. There is a lacuna in the legislation in that regard.
Mr. Cantwell
Although I have been discussing income continuance, the problem lies in the pensions area. I acknowledge the help of Mr. Paul Kenny, the ombudsman in this regard. The problem is that the benefits we paid for through income continuance are somehow not being implemented in the pension scheme. There is no clear definition in respect of the people entitled to benefits. Reference is made to temporary absences. Does that relate to somebody on a long holiday or a person who missed a plane? Would it not be easier to say that for people who receive income continuance payments, this will apply to them?
Some of our colleagues have 25 or 30 years left. There is one man who has 27 years left. When I started in Tara Mines in the 1970s, the operation had an expected life of 30 years and should, therefore, be finished now. However, it got the Bula ore body and an area called the south-west development, which is very profitable and which, please God, will continue. The man to whom I refer has 27 years left, but where can he get help?
I must be fair to Tara Mines. After our fight in 1993, Tara Mines told Oliver Hilliard that it agreed that it was unfair that he should be paid a pension frozen at what he had earned when he worked in the mill. He was told that when he reached 65 he would be given the equivalent pension to that of a person working in the mill. We accepted that, even though he was losing approximately €1,000 per year, because it was a hell of an improvement on the frozen amount.
I sent the committee a document that refers to a "Prime Time" programme in which Tara Mines would not take part. Tara Mines issued a statement, which I have here, stating that improvements made to the pension scheme whereby the pensioners get benefit entitlements, for members of the group featured on the programme were based on their pensionable salaries at the time of leaving Tara Mines. It went on to state that it wished to inform the programme that any employee who left employment on income continuance — we did not leave, we were sacked — would receive the same pension and be entitled to the same net benefit as if they had remained in Tara Mines.
We only discovered, thanks to Mr. Moriarty of the Pensions Board, some months ago that Tara Mines was going back to court in respect of that matter. It is doing so because it wants to contradict what was contained in the statement. In 1998 it had introduced improvements. In any pension scheme, one and a half times the old age pension is subtracted from the basic salary and the remainder becomes known as the pensionable salary. The improvement announced by Tara Mines in 1998 was that it would no longer deduct the old age pension from the basic salary. We figured that was fair enough. Not only that, a Labour Court recommendation, LCR 14523, of Mr. Kevin Heffernan said that regardless of whether workers worked the full period or were on income continuance for part of it, they should have the same pension. We are seeking both of these recommendations and we just want honesty and fairness.
What have we discovered from the Pensions Board? Tara Mines has gone back to say that it will subtract the social welfare pension in calculating Oliver Hilliard's pension. The excuse given to him is that his employment was terminated. Despite the Labour Court agreement and Tara Mines's notice to RTE, we are faced with con job No. 2. We have been deceived a second time. Having been told he would get the same pension, he has now been told he will not get it because the company terminated his employment.
Thanks to the Pensions Board, we discovered that Tara Mines was returning to court in connection with this matter. We must go to court to fight in order that the improvements that were announced will apply to this man. Is it fair to apply this to sick workers? Some of our colleagues are in hospital. Has Ireland reached a stage where workers are obliged to fight in this manner?
We must adhere to the points raised. Mr. Cantwell seems to be advocating that the Pensions Act must be changed to allow for the income continuance plan — which is treated as separate even though he and everyone else regards it as being one and the same — to be treated as such. Mr. Kenny described it as an adjunct. He is the Pensions Ombudsman and I wish to acknowledge his assistance to the committee with any matters it has pursued in this regard. He wrote a summary on this issue, which has been extremely helpful.
The first point made by the delegation is that the Pensions Acts should be changed to bring this within the regulatory framework. What happened with regard to the escalator clause, whereby the disablement and disability benefits appear to be increasing by 5% — as set out in the clause — but the pension was not going up at the same time? The first priority is to bring the pension arrangements within the remit of the Pensions Acts, not just for employees of Tara Mines but for the wider workforce.
Mr. Cantwell
For the entire country.
The second issue is the escalator clause. The third issue referred to by Mr. Cantwell are the changes in the features. The social welfare payments were originally taken out of the payment and deducted as an average of three best previous years. That left the workers much worse off. This was an improvement that had been achieved and that would have been very beneficial to all the workers. Mr. Cantwell maintains that this commitment, which was set out in a number of agreements and was referred to in the "Prime Time" programme in 2001, has now been resiled from.
Mr. Cantwell
That is correct. I compliment the Chairman.
It is not easy for people to follow the details but it is my job to ensure that the committee understands the information. In respect of which aspects did Mr. Cantwell go to the High Court?
Mr. Cantwell
We are arguing that it is irrelevant whether Tara Mines terminates workers' employment. They have no jobs to which to return. We argue that a worker who is on long-term disability such as income continuance and who is putting money into the Tara Mines pension fund for all intents and purposes remains an employee. Otherwise, if that person died and death in service benefit was paid, to what service would it relate?
When we received our P60s, we discovered that Irish Pensions Trust was named as our employer. In other words, the employer's name was transferred but there has been no admission that Irish Pensions Trust is the paying agent for Tara Mines. This is a serious matter. We will not be able to keep fighting indefinitely. We have already been fighting for 20 years.
I have paid 20 years' worth of AVCs and I do not know where I stand. I was not a member of a union because I was a member of staff and I had nobody to speak for me. When I spoke to Mr. Tommy Byrne to explain what was happening, he told me that it was wrong. When I raised the issue of termination of employment, he also said that it was wrong. The consent of Norwich Union was obtained because Tara Mines is a big payer. Termination of my employment is totally alien and this was supported by the Watson Wyatt report. One must always have a job to which to return when one becomes well or whatever.
The termination of my employment and that of Mr. Oliver Hilliard is being turned back on us by Tara Mines. It is not the case that Norwich Union would not pay us our benefits but Tara Mines is using it to say that we will not benefit from the improvement because we are no longer employed by the company and that we will not get our AVCs or our votes. We should have been a part of this agreement. Mr. Hilliard questioned it and he was told there is no written agreement. More than 100 people have no jobs, no pension rights and there is no written agreement. I asked the Revenue Commissioners how an employer can continue to pay death in service benefits to employees who are not on its books.
I apologise for being late. The traffic was very hectic outside. I congratulate Mr. Cantwell on the work he has done, which is very impressive. He has put considerable work into this area over the years. We have been wading through the information he has sent us. I understand some 238,000 people throughout the country are members of ICPs, 85% of them through employer sponsored or voluntary groups. Is any other group of workers affected like the Tara Mines workers?
Mr. Cantwell
I did a small piece on one of the "Liveline" programmes. Yes, there are others, some even in Dublin. All over Ireland there are workers in the same situation. They are almost certainly not getting the pension benefits, but it may be different from Tara Mines in that the workers in Tara Mines paid for it in their wage packets, whereas in most other cases it would be the employer. At the end of the day, because it was a benefit, the benefit should still apply to the worker whether it was paid for by the worker or the company. There certainly are others, possibly in every constituency of the elected representatives present, including in Dublin. I know of some who approached me after the RTE programme.
How many workers or former workers in Tara Mines are affected? How much money are they set to lose from their occupational pensions as a result? How many workers have had their contracts terminated through Mercer? How many workers are still classified as employees under the original Norwich Union scheme? The issue seems to fall between two stools, the Department of Social and Family Affairs and the Pensions Ombudsman on the one hand and the Department of Finance and the Financial Services Ombudsman on the other. Where should responsibility lie? Perhaps we should invite our colleagues from the Oireachtas Joint Committee on Finance and the Public Service to have a joint meeting on the matter.
We will invite the Pensions Ombudsman pretty soon. He has indicated that he is willing to come.
There is an issue of poor pension coverage and provision along with lack of understanding. Whenever I hear people talking about pensions, it sounds very complex. Even those who study the topic can get bamboozled with detail. As I said when the Pensions Ombudsman appeared before the committee, the area needs to be simplified so that it becomes understandable for people. The terminology used is almost like a different language. It is easy to see how people can get confused. Would Mr. Cantwell agree? What is the current entitlement for people? I know a court case involving a person with disability is ongoing. What is the status of the case?
They are the main points.
Mr. Cantwell
I do not think my memory will last that long, but I will give it a shot.
Mr. Cantwell has addressed some of the points already.
Mr. Cantwell
The employees in Tara Mines would exceed 600.
Deputy Stanton asked how many were affected.
Mr. Cantwell
Tara Mines has improved it considerably from the time it advised us, which is the explanation given here. The rules of the pension plan provide for those on income continuance to receive a pension at normal pension date, which is related to pensionable salary at the time of going on disability, but with the years of service. That is the kernel of the question. That has improved now because they say they will give whatever is inside in the job. We have no problem with that. We have a problem with those categories of workers who were disabled prior to 1998.
I would also like to mention something else.
How many are in that category?
Mr. Cantwell
I would not know exactly. I would like to explain something. Mining is such a high risk industry with so many men killed that the loss of an income continuance scheme was a disaster for the workers in Tara Mines because so many get injured so young. I hope we can learn from what happened in Tara Mines. As I was a member of staff, Tara Mines paid the costs of my income continuance. The other workers paid for it. In our group, the ratio of staff people to hourly paid workers is approximately 1:15. In the 1990s, the company sought quotations. The first policy covering both staff and hourly paid workers was with Norwich Union. Canada Life offered to take on the staff side, but nobody would touch the hourly paid workers. In the insurance business, those who do not have accidents cover those who do. The time bomb is now ticking in respect of Tara Mines. When the staff insurance was taken away, Norwich Union was left carrying a high risk group and the cost of insurance shot up. In 1999, nobody could afford it and it is now gone. It is estimated that Norwich Union and Hibernian are losing approximately €20 million. They were paying approximately €1.5 million plus the premium every year, which was the worst experience they ever had. There was abuse in Tara Mines and some people received income continuance who should never have got it.
While the insurance was to pay out three quarters of the basic salary plus social welfare, there was such a high medical requirement to work in the mines that people who were going deaf from drilling had their employment terminated. When they went before the social welfare inspector, the level of deafness sustained up to that point was not assessed as serious. They were denied social welfare and were left only with the income continuance. They failed to realise that at 65, they would not have an adequate history of PRSI contributions and would be left with a non-contributory pension, the level of which would be reduced further by the small level of pension payable from Tara Mines.
When a miner's hearing was threatened, he or she should have been removed from the mine environment and given a job on the surface. The income continuance should have been used to bridge the gap between the high rate of pay in the mine and the lower rate for lighter work on the surface. Unfortunately, that happened in only one instance and every other miner had his employment terminated. Those miners were not approved by the social welfare doctor with the result that we are left with a time bomb.
Councillor Cantwell's documentation refers to the recent response of the Minister in the Dáil which seems to put new positions on the table and indicates what might happen in future on foot of the recommendations of the Pensions Board. A month later, however, we have yet to see what those recommendations are. The Department has set out regularly the near-impossibility of putting retrospection in place to remediate the damage caused and the disadvantages suffered by people on the schemes outlined by Councillor Cantwell. What is Councillor Cantwell's observation on the Department's position?
The committee received a presentation from the Pensions Ombudsman who will address us again. While his submission had positive implications for the argument Councillor Cantwell has been making, it highlighted the fact that there was an absence of legislation when the gaps that needed to be filled were legislative in nature. In what way should the Legislature amend the current legislation to fill those gaps?
Mr. Cantwell
I acknowledge Deputy Boyle's fantastic work for the Tara Mines workers and every other disabled worker. This is not an insurmountable task, in which respect I disagree with the contention that retrospection is not possible. Tara Mines is unique in the numbers of injured and killed workers due to the high risk environment. In general, employers have at most one or two injured employees, in which case it is not difficult to admit that a mistake had been made in respect of their pensions. Retrospection would not be problematic for such workers. According to Watson Wyatt on the insurance in this case, it should not be a big deal for the Department of Enterprise, Trade and Employment to ensure better disclosure to the employees. Unfortunately, the documentation is all doublespeak. The example of the plain English campaign should be followed and the language simplified. I would like to know what the following means:
In addition the income continuous plan would provide an amount which would maintain the level of contributions payable under the pension plan.
It further states:
This amount would be utilised to maintain contributions to the company's pension plan in order that death in service and pension payments continue to accrue.
Does that mean there must be extra years of service or a 5% rule? It is impossible to say.
It is ambiguous.
Mr. Cantwell
Absolutely. One is asking the employer, who has a vested interest, to make a decision in the best interest of the worker. In the real world, this does not happen. I have no problem with the Department of Enterprise, Trade and Employment looking after certain aspects of disclosure but there is a need for clarity on income continuance and pensions. My understanding is that an insurance company offering income continuance cover can either give one a frozen income or an escalating one. It can give one a frozen or escalating pension contribution or a destined service. It will not take rocket science to say, "Mr. Hilliard, if you pay for that, that is what you get".
I endorse what Deputy Stanton said. I compliment Councillor Cantwell on his outstanding work and am sorry I did not get an opportunity to meet him before the meeting.
I always bow to the greater wisdom of our barrister chairman, who put the relevant points together very succinctly. I mean this genuinely because this issue is a maze. Mr. Cantwell made reference to the plain English award. Such an award exists in the United Kingdom and I wish it were granted in this country.
The councillor referred to the fact his employment and that of his colleagues was terminated. In what circumstances did this occur and why were the employees allowed to continue to make additional voluntary contributions?
The chairman referred to the escalator clause as being one of the second major issues. If anybody takes out a plan, be it related to education, insurance or a pension, an inflation-proof figure of 5% is automatically built in right across the industry. The increased payments exist as an option.
The councillor referred to a document concerning Mr. Hilliard. We all remember his brother, a great friend of us all, and Mick Hilliard, the former Minister. It is sad that Councillor Hilliard should have to come to this House, where his family served so distinguishedly, to look for his rights. When Mr. Cantwell referred to the original pensions, reference was made to the 5% escalator. What happened along the way in regard the figures he quoted, to which he would now be entitled? It seems from what we were told that the procedure in this regard was agreed. At what point was it changed? What is the councillor's relationship to the company in light of his remarks about setting up the trust fund regarding which he was not given a vote initially but was given one subsequently? It seems there is some de facto recognition of his status.
The matter is very complex and I thank the councillor for trying to clear it up.
Mr. Cantwell
As a member of the Trim Fianna Fáil cumann, I had the honour of canvassing with Mick Hilliard in Meath in the 1960s. Little did I believe I would be present with his son today. I am grateful for having worked with the Hilliard family.
I sought clarification from Tara Mines and Mercer. I asked my status and was told that if I was asking whether I had a job to go back to, I did not because I was not an employee, but that if I was asking in the context of the pension scheme, I did. In the latter case, I was told I was an employee of Tara Mines for pension purposes, and for that reason only I paid additional voluntary contributions. Furthermore, I went to the Revenue Commissioners and they said that once years of service are accrued, one is an active member.
In pension speak, regarding which I will give way to Mr. Kenny, the Pensions Ombudsman, there are either pensioners, who are over 65 or the retirement age, active members, who are either at work or on long-term disability pay on the basis of accrued years of service, and deferred pensioners. There are no categories in between. Tara Mines, however, is trying to create a fourth group, namely, disabled workers. Maybe individuals in this category are half deferred pensioners or half active members, but what Tara Mines is doing does not apply.
I was advised that if Tara Mines wanted to exclude us, the current workers, from the benefits of the improvements in 1998, it would have been a very simple matter to set up "pension plan B". This would have applied to all workers but it did not happen. The company is now trying to correct it retrospectively so that it will not apply to us. We have to go to court to argue that there are accrual years in service and we are entitled to the improvements because they have not reached a pensionable age.
Did Mr. Hilliard not sign the document initially which indicated there was a 5% escalator clause?
Mr. Cantwell
This is where the problems come in. Mr. Hilliard was a member of SIPTU which signed it on his behalf. It has a letter which confirms its understanding that the escalator clause was to apply. Tara Mines has never conceded to that. Mr. T.P. Byrne, who set up the scheme, confirmed what Oliver Hilliard is entitled to, as well as the union and the workers' union representative. Everyone is agreed on it except Tara Mines.
There seem to be several legal fictions involved in the matter. One day one is a contributor and the next day one is not. I am bamboozled by this.
This pension matter is very complicated. I hope the Pensions Ombudsman will investigate this scheme. If the income continuance plan is still operating, he must investigate the companies involved to ensure no other workers will find themselves in Mr. Hilliard's position. It is a disgrace that sick workers must go to the courts to get their right entitlements. It is sick that we can protect the likes of Tara Mines, Shell and other large companies and the pension schemes and industry. They are all protected by the law, the State and the Oireachtas while the ordinary worker is not.
My father worked in Westport Textiles from the day it opened to the day it closed. Like Mr. Hilliard, many of the workers found themselves in very bad health because of bad conditions. They received bad pensions but the company and its management were protected and well looked after when State land was being given out. It was not given to the workers.
I accept the Pensions Ombudsman has a difficult job but he must consider the problems with State pension provision. Take the case of an individual who worked in the 1930s to the 1950s and had PRSI stamps but did not work again for 20 years. When he or she looks for the State pension, it is only calculated over the 30 or 40 years because there was a break in their scheme. On the other hand the Government introduced a scheme for the self-employed whereby contributions of more than ten years resulted in them receiving the full State pension. I know of people in the County Mayo who paid PRSI for 30 or 40 years but only receive part of their pension while the self-employed, who only contributed to the scheme for ten years, receive the full pension. This must be examined by the ombudsman.
What happened in the case of Mr. Hilliard is wrong. I propose the committee formulates a procedure to correct this. The State has enough money to deal with it. The time has come to pay the workers who built up this country but who are now sick. There was never as much money in the country. Companies such as Shell are well able to take the money and pour it out of the country to pay their investors across the world. We must pay the Irish workers who have suffered. During the next social welfare Bill, the committee must table the necessary amendments to deal with the issue of pension provision.
I wish the Pensions Ombudsman well in his role, but he must investigate every one of these pension schemes and these companies. It is like the Oireachtas. We pay people a great deal of money to confuse us. They draft legislation to ensure we do not understand what is going on. The Ombudsman must recommend to Government that whatever scheme workers become involved in, it should be simple. They should know what they will receive if they are sick or what their family would receive were they to die.
What is going on is a disgrace. It is all about keeping the workers down and big business going. It will not cost a fortune to deal with the workers in these situations. We must ensure they get their proper entitlements if they are sick or when they reach pensionable age. What was said about social welfare inspectors is right. If an individual gets a small pension from a company and he or she is entitled to a non-contributory pension, on reaching the pension age, it will be taken off the State pension.
Deputy Ring has strayed slightly from the topic of the income continuance plan. We are debating only one issue today and we have dealt with that already. Mr. Kenny has already stated that he is hamstrung in this area since an income continuance plan does not fall within the strict terms of a pension plan, being an adjunct or add-on thereto. Mr. Cantwell will agree that Mr. Kenny is prepared to deal with this issue if he is given the legislative basis. He already recommended something along those lines in his 2005 report which, if it has not arrived, is winging its way towards the Minister. We are unable to make any recommendations until the Pensions Ombudsman deals with it and furnishes the Minister with his opinion regarding the issues he would like to address.
Have we no role?
We are very constrained because our role is legislative.
That is what I am saying. Let us introduce the necessary legislation and allow him to deal with the issue.
That is our recommendation, but we cannot produce it in a vacuum. We must formulate a way to deal with the issue. One of the problems is that legislation can be prospective, but we are trying to deal retrospectively with the situation in which people have found themselves. In fairness to Mr. Cantwell, he is now before Mr. Justice Kelly in the High Court regarding several issues, and it would be interesting to see the outcome which will have a knock-on effect.
Mr. Cantwell
We stood in the Four Courts some weeks ago when Mr. Justice Kelly looked at the sick workers and said to Mr. Hilliard, whom we have asked to be representative beneficiary, that he was entitled to junior counsel, senior counsel and pensions experts, and that Tara Mines would pay. Standing in that court were senior counsel for the trustees, Tara Mines, and the pensions trust. I do not wish to impugn their credibility, but all three are singing from the same hymn sheet. We have one barrister for the disabled workers. Speaking as a Kilkenny man, it seems to me that we require a DJ Carey as senior counsel. We cannot afford to lose the case as it would be quoted chapter and verse to illustrate how an employer may terminate workers' employment without such improvements applying, despite their having put in years of service. I am genuinely fearful of the outcome because it would have a catastrophic effect. I am very grateful to Deputy Ring for his support.
I believe that the State had a 25% shareholding in Tara Mines up to 1989. The scheme was established in the 1980s and I ask for protection. I know the committee is limited in its actions, but some of those workers are very exposed and vulnerable, since peculiar conditions can come into play to prevent their qualifying for income continuance. Where should those seriously ill people take their fight? We are very exposed and do not know where to turn.
That is our problem, and the State has a duty of care to protect us. Why has it hung us out to dry at the mercy of an employer? I was the engineer who took the equipment from Avoca Mines, Silvermines, and Tina Mines. They are ruthless, and the same thing has occurred in Navan. They do not care as they sell nothing on the Irish market and there is no need for goodwill. If they were selling buns, Guinness or eggs, it would be different, but instead their product is sent on a boat to Finland or Sweden. If the Irish workers before the committee go without the protection of Dáil Éireann and the Government, that is what will happen.
My colleague, Mr. Mooney, is not very well, but he should be here. We are sick people who are in and out of hospital, and my colleague spends half the year there. Why must we plead to get help? I urge the committee to help us. The Chairman has said that the Dáil cannot legislate retrospectively, but that means that we will suffer for the next ten or 20 years. We ask for the committee's help.
Another issue is that the employer is able to complain to the Financial Regulator but not the workers.
Mr. Cantwell
Absolutely. His name is on the insurance policy.
It is his name, as Mr. Cantwell stated. There are many crevices, and the workers seem to have fallen between them all.
I thank Mr. Cantwell, Mr. Hilliard and their colleagues for attending today and highlighting their problems, which are truly appalling. We have discussed pensions in this forum several times and many people in the country, especially those with deferred pensions, are discovering that they are in a very poor state. However, this situation is even worse because the workers have continued to contribute over the years. I suggest that their contributions were taken from them under false pretences, as the contributions are not materialising into the pension they expected to get. Pensions can be confusing for all of us, and as Deputies Ring and Stanton stated, the aim within the industry is to confuse so that we cannot come to grips with it. Every individual seems to have a different type of pension scheme and it is difficult to find out exactly how it should work and people's entitlements.
Does Mr. Cantwell know if the Tara Mines pension fund is fully funded at the moment? When the pension fund was fully funded over the years, did the workers take contribution holidays? When the witnesses joined the company, was their pension a defined contribution scheme? The income continuance plan was indexed at 5% per annum. How far short does that leave the pension plan from the witnesses' expectations? Were they asked to join the pension scheme when they joined the company, or were they told that they had to join it? Were they in a position to opt out of the scheme? In other words, was it mandatory for the workers to join that scheme?
Mr. Cantwell
Like most pension schemes, the Tara Mines scheme is insolvent. The fund lost much value during the Gulf War and it has not recovered. The company's defence in the court case is that if the disabled workers get the improvements, it will make the fund insolvent. The fund is already insolvent. It is already €100 million in debt, so it is a joke to suggest that our €5 million will make it insolvent. The fund is in trouble like most pension schemes, but the company has a ten-year plan.
Giving a mining company ten years to get its pension fund is dangerous because mining prices are cyclical. Mining prices are directly related to oil prices. Car manufacturers generally use plastic products, but if the price of oil goes up, they switch to zinc. Zinc prices are then very high. In 2004, Tara Mines put in place a scheme whereby it will get the pension back in 2014. I worked with the company when it was called Tara Mines, Noranda, Outokumpu and Boliden. Where will the company be in ten years' time? What happens if everything goes wrong in that time? Its papers show that Tara Mines is making €10 million profit, so this is the time to put the money into the pension fund. I saw this happen in Tynagh Mines and other mining companies. The ropes were cut to flood the mine and the company was gone. Members should not think that they will hang around to hand out watches for long service.
Senator Terry asked whether the workers took contribution holidays. They took a holiday at the beginning of the Gulf War, when the actuary and the trustees said it would be fine to do so. This only made the situation worse. The trustees are using the pension fund as if it is their money and they say the money in it is irrevocable. During the green strike in 1999, at which time most of the workers were at home, we were told the money would be put into our pensions and we would be at no loss because our pensionable service would not be broken. The company put the money in but it is our money.
Another difficulty is that the company has reduced the pension age from 65 to 62. It is a defined benefit scheme rather then a defined contribution scheme. The money to which Mr. Hilliard and I are entitled if we are on sick leave increases by 5%. It is necessary to maintain the pension; one cannot be left static because they go in tandem.
Senator Terry also asked whether the income continuance contributions fall short in terms of expectations for the pension plan. I have studied the pension scheme in Tara Mines and the funding rates recommended over a 12-year period were, based on a combination of worker and company contributions, some 12%. The contribution from the income continuance scheme is 15.4%. The insurance, therefore, is contributing more for Mr. Hilliard and every other person on income continuance than if they were still at work. That increases by 5%.
Senator Terry also asked whether workers had any choice about joining the pension scheme when they joined the company. When the scheme was introduced in 1980, workers were given the option of joining and getting their service back. For those who joined the company subsequently, it was mandatory to join the scheme. I understand they could opt out of the income continuance but one could not avail of the income continuance without partaking in the pension scheme.
Councillor Cantwell makes the point that the legislation currently provides for a ten-year funding period. This is an area we should examine. This arrangement between the Government and the pensions industry allows employers a period of ten years to ensure schemes are fully funded. We all know they often do not do so. There is plenty of work to do in this area.
Like other speakers, I am impressed by Councillor Cantwell's grasp of the detail of this complex issue. It is clear he has been ploughing a furrow on this for some time. He pointed out that this particular scheme is a defined benefit scheme as distinct from a defined contribution scheme. He mentioned that Tara Mines is the insured under the permanent health insurance, PHI, scheme which presumably provides the income continuance. It is generally the individual who is named on the policy and I am surprised that it should be the company. This struck me as odd.
Mr. Cantwell mentioned that his wages were frozen at the time he became disabled and went on income continuance. What is the position of a person employed in the company for 20 years and is disabled at age 50, 15 years from retirement, in regard to the service entitlement? Is Mr. Cantwell confined to the 20 years' service he had when he went on income continuance or is he given credit for the period he has been on income continuance?
I ask Mr. Cantwell to clarify a particular point. Was a pension contribution made from the income continuance or did the insurance company pay 15.4% during the period he was on income continuance? Does the company make any contribution to the pension fund in respect of an individual on income continuance for a particular period? I also ask Mr. Cantwell to elaborate on his comment that the pension fund is insolvent.
I thank Senator Jim Walsh for his crisp and sharp questions.
Mr. Cantwell
I thank Senator Jim Walsh for all the help and support he has provided to the group of workers. It is and has remained a defined benefits scheme. I am unsure of any plans on the part of Tara Mines to introduced a defined contribution scheme at this point. It would be dodgy, especially after our experiences.
As the Senator noted, Tara Mines is the insurer on the permanent health insurance, PHI. Perhaps this was because it had so many employees. Nevertheless, it is ridiculous that, having paid for it, Mr. Hilliard could not even open the door an inch to see what was inside. That is both true and seriously wrong and I suggest that if changes are being made, the committee should recommend that if five or ten or whatever number of individuals contribute, their names should constitute a subsection of the employer and should have the same rights.
On wages, Tara Mines uses the pensionable salary when one becomes disabled. If one earns €20,000 when one becomes disabled at 30 or 40 years of age, the sum of €20,000 will be used when one reaches the age of 65. The purpose of the escalator clause is to allow for stepped increases. Thereafter, one calculates total service by adding together the years at work to the years when one was disabled. While this is not in doubt and is being done, the problem is with pensionable service.
The Senator asked whether income continuance was funded. The answer is "no" and the normal contribution for a worker was 1% of salary. Once a worker becomes sick, he simply drops out of the cost of that scheme and there are no other associated costs. Moreover, Tara Mines did not pay a contribution and insisted the workers should pay 100% of the costs. As I explained, in 1999 or thereabouts, the costs became so prohibitive that no one would touch the hourly paid workers. Because the costs had become so high Tara Mines, under pressure from the union, offered to contribute something like £20 per week towards the cost of the PHI. Up to then however, the hourly paid workers paid the full cost. Thereafter, the cost became prohibitive.
I thank Councillor Cantwell, Mr, Hilliard, Ms Eilish Hilliard, Mr. Michael Shiels and all the workers. The committee members will provide as much assistance as possible. This appears to be an extremely complex issue. With all due respect to the Pensions Board, I do not understand why pensions must be so complex that no member understands them. It is absolutely ridiculous that everyone switches off when they hear the word "pensions".
Two issues appear to have arisen in this regard, namely, the fact that income continuance plans are not within the remit of the Pensions Board and Mr. Kenny's ombudsman role. Hence, I suggest the legislation must be extended to include the ombudsman's role and the income continuance plan. If it would be helpful, a Private Member's Bill could be introduced in the Seanad as it appears that a solution to this problem will require legislation. All are at their wits' end as to how this problem may be solved. I do not know whether such a move would be of any help.
Mr. Cantwell
I acknowledge that Senator White has met the group and is highly sympathetic. I compliment her on the smashing job done in respect of the book. Obviously, her heart is in the right place with regard to ageism and this is welcome. However, new legislation is required and there is no other way.
I compliment Councillor Cantwell on his excellent presentation and for clarifying matters, along with the Chair. He is awaiting a decision from Mr. Justice Kelly which may be helpful. Is the ombudsman completely unable to act at this point?
That is not within the purview of the ombudsman's remit.
In the light of what the joint committee has heard, perhaps it could make recommendations in this regard. As Deputy Ring noted, this might be done as part of the annual Social Welfare Bill. Does the Chairman think that would be appropriate?
It is somewhat outside the scope of the Social Welfare Bill. The Pensions Act requires amendment to include these matters. Currently this is outside the social welfare code. It is not a very straightforward or simple matter because Councillor Cantwell explained to me in detail that for the most part, the ordinary basic wage of the miners was extremely poor. Their income was based upon the bonuses related to a most difficult job which most of us would be incapable of carrying out. Such a job carries risks. I understand that a decent income for miners was made up of bonuses and their basic salary. We must examine this very carefully in order to incorporate it as part of a legislative framework. It is very easy to stipulate that somebody on a basic salary would be looked after but it is important to realise that approximately two thirds of miners' income could be composed of bonuses and incentives. One could still be left carrying the baby, for want of a better phrase, and only one third of miners' income could be included. This is why this area is so complex. It will require careful analysis because it is not something one can dive into and produce a solution off the top of one's head. I am sure Councillor Cantwell has met with various Ministers and I believe he made a presentation to the Minister for Social and Family Affairs.
Mr. Cantwell
No.
Somebody else may have made the presentation on Councillor Cantwell's behalf. We will certainly examine how we can play a constructive role. The matter may involve other committees, including the Oireachtas Committee on Enterprise and Small Business, which would have a role to play in the matter. It is no use trying to say it would not have such a role to play. Obviously, the Oireachtas Committee on Finance and the Public Service will also have a role.
I am a member of the Oireachtas Committee on Finance and the Public Service and I agree it could examine the matter.
That is another area. This matter encompasses three or four committees and provides an ideal opportunity for joined-up thinking in Government. We will certainly play our role in trying to resolve the matter. I understand this committee was the first to give Councillor Cantwell the opportunity to highlight this issue in the most public way in this forum. It is the first time we have dealt with matters of this nature, although Senator Terry is vigorously pursuing the issue of pensions on behalf of a number of people. This is the first time we have dealt with the income continuance plan. An anomaly exists whereby it is not a pension per se, merely an adjunct to a pension.
We must examine how we can progress this matter with this Minister. Mr. Kenny will hopefully appear before us within two weeks, although we have not informed him about our plans. We will certainly try to facilitate him. If he cannot facilitate us, we will facilitate him either in the morning or the evening, whichever is most convenient for him. Mr. Kenny has fleshed out our understanding of the pension scheme and we must receive briefings from other officials. Based on all this information, we intend to progress the matter as best we can on Councillor Cantwell's behalf.
It is all very well keeping the matter in the public eye but we must examine in what way we can constructively advance the matter. I hope this approach will be of use to Councillor Cantwell.
Mr. Cantwell
I thank the Chairman. We can fight because we have sufficient numbers but we would like the committee and the Minister to examine the lot of other workers. If one of them is on a pension of €20 per week, this small additional amount is the difference between dignity and poverty. The Irish worker does not like knocking on people's doors and asking whether he or she will receive all of his or her pension. By and large, unions in Ireland are no different from their UK counterparts. They are becoming switched on now in respect of this issue but they were not switched on 20 or 30 years ago. As long as they were securing increases for workers, they did not regard pensions as their responsibility but they have become switched on to the issue. We would like the committee not merely to examine the case of Tara Mines workers in isolation but to think of the other workers as well.
The Tara Mines case is the vehicle which brought the matter to our attention. Any legislative framework or amendment to the legislative framework would empower everyone who is in this situation. This would apply nationally; we are not singling out a particular group. I salute Mr. Cantwell for highlighting this matter on behalf of his fellow workers across the country.
Mr. Cantwell
I thank the Chairman and the committee's members for their time, Mr. Richard Manley and Mr. Brian Prunty for their work and the deputy mayor of Navan, Councillor Brennan, who attended on behalf of Councillor Tommy Reilly, who is receiving a check-up in hospital but has asked the committee, as we have all done, to help us. We are grateful to the committee for providing us with a wonderful opportunity.
We were delighted to have our guests attend. This was a valuable meeting and we all learned something from the presentation. Mr. Cantwell has this matter well researched.
Can I take it that the Chairman, as chairman of the lead committee, will be prepared to chair a meeting of the number of committees involved, including the Joint Committee on Enterprise and Small Business?
Yes. We will communicate with the other committees in this regard. We thank the Senator for his suggestion. This meeting has had the largest turnout of our committee members in a long time, which is a comment on how important is this issue.
The joint committee went into private session at 4.20 p.m. and adjourned at 4.25 p.m. until 3 p.m. on Tuesday, 18 July 2006.