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Seanad Éireann debate -
Tuesday, 17 Jul 1990

Vol. 126 No. 3

Pensions Bill, 1990: Second Stage.

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

It is a great pleasure for me to introduce this very important legislation in the Seanad. I am reminded at the outset of the words of Percy French,

Are you right there, Michael are you right;

Do you think that we'll be home before the night?

I have been so slow in startin'

that I could not say for certain,

but we might now, Michael, so we might.

I am delighted that we did get started eventually. This Pensions Bill is historic legislation. It is the first time since the foundation of the State that comprehensive legislation has been introduced to regulate the operation of occupational pension schemes, which up to now have been governed mainly by 19th century trust law. My main purpose in introducing this Bill is to ensure that schemes are properly administered and that above all the pension rights of members and their dependants are adequately safeguarded. I plan to achieve this by providing that members must have full access to all information about the running of their schemes and the security of their pensions; setting out the duties and responsibilities of trustees and providing that trustees who fail to comply with the requirements will be guilty of an offence and subject to substantial fines or imprisonment and, if necessary, can be removed; enabling me, as Minister, to provide for member participation in the appointment of trustees by way of regulations; and establishing a statutory pensions board to monitor and supervise compliance with the new requirements. Employers, trade unions and professional groups involved with pensions will be represented on the board.

The Bill will also ensure that members can change jobs without forfeiting their pension rights; schemes are properly funded and, as a result, that employers deliver on the pension promises made to their employees; and there is equal treatment for men and women in relation to the scope and conditions of access to schemes, benefit rights and contribution levels. With the enactment of this Bill Ireland will be to the forefront internationally with regard to the regulation of occupational pension schemes.

The enactment of this Bill will represent one of the most significant developments in recent decades in relation to the provision of adequate and secure pension cover for our citizens. Occupational pension schemes now have a major role in the provision of pensions. There are over 25,000 occupational pension schemes in existence in Ireland today. Some 550,000 employees, or roughly two-thirds of the total number in employment, are members of such schemes. Pension schemes have also become a major vehicle in the national economy for savings and investment. There are no comprehensive returns of statistical and financial data for the pensions industry. However, on the basis of the most recent estimates the assets of pension funds currently amount to some £10,000 million. Annual contribution income is in excess of some £500 million while new investment income is of the order of £600 million. Benefit payments out of these schemes are estimated to be in excess of £250 million per annum.

I should now like to briefly review the developments which have taken place in relation to pensions and, in this context, to highlight the important role of occupational schemes in the evolution of our national pensions system. The first priority of the State has been to ensure that the old, the widowed and the permanently incapacitated have an adequate basic income.

Initially this was provided solely by way of schemes of social assistance. Since then comprehensive social insurance pensions have been developed. This began with the widows and orphans contributory pensions in 1935, the old age contributory pension in 1961 and retirement and invalidity pensions in 1970. Compulsory social insurance has been progressively extended to the various categories in the labour force. The most recent major development in this regard was the extension by me of social insurance pensions to the self-employed in 1988.

The basic weekly rates of pensions have been increased substantially in real terms, particularly over the past decade. In addition, many pensioners qualify for free travel and allowances for electricity, free telephone rental, free TV licence, fuel and the living alone allowance. At present some 375,000 persons are dependent totally, or to a significant degree, on a weekly social welfare pension or 473,000 if dependents are included. The overall cost of providing social welfare pensions will amount this year to some £1.25 billion, or 45 per cent of total social welfare expenditure of some £2.76 billion. People often think that the expenditure on unemployment benefit is the biggest but it is not; pensions are by far the biggest part of our expenditure in social welfare, accounting for 45 per cent of the total.

For much of our history old age, widowhood and permanent incapacity brought with them poverty, deprivation and dependency. The progress made in developing the overall social welfare pensions system has meant that a reasonable, basic level of pension is now available. This was borne out by a recent ESRI survey on poverty which showed that the elderly, in particular, were no longer a high risk group.

To ensure that all citizens have a basic level of social welfare pension, the State has relied on occupational pension schemes to provide workers with a supplementary pension related to their pre-retirement income. These occupational pensions are normally provided as part of the terms of employment for employees in the non-commercial public sector.

A comprehensive system of tax reliefs has been introduced to encourage the development of occupational schemes in the private and commercial semi-State sectors. The present tax treatment of occupational pension schemes is based on the provisions of the Finance Act, 1972.

The cost of these reliefs in terms of revenue foregone is considerable. The National Pensions Board, in their report on the tax treatment of pension schemes, estimated that the cost of tax relief on contributions in 1989 would be £203 million. Tax relief on the investment income of pensions in 1989 was estimated at £162 million. However, these tax reliefs are in effect an investment in the future. They facilitate the provision of pensions which will result in employees during retirement and after death, their surviving dependants, being considerably less dependent on State funded services. This leaves the State with more resources to devote to those who have to rely mainly on State schemes for pensions and other essential services. In addition, of course, once the pensions become payable they are subject to income tax in the normal way.

Occupational pension schemes now have a major role in the provision of pensions. This can be seen in the numbers covered, the value of pensions provided and the significant contribution being made by the State through the system of tax reliefs to the growth and development of privately funded occupational pension schemes. Accordingly, it is in the interests of all concerned, not least the State, that a comprehensive and effective system for the regulation of occupational pension schemes is in place to ensure that members' pension rights are adequately safeguarded.

To assist Senators in understanding the need for the regulatory system provided for in this Bill, I would like to briefly describe the nature of occupational pension schemes and the regulatory environment in which they currently operate.

Occupational pension schemes in the semi-State and private sectors are usually financed by setting aside funds during the working lifetime of the employees. These funds are normally placed in the control of trustees who hold and invest the funds under the terms of a trust deed. By creating a trust fund in this way the pension scheme becomes a legal entity separate from the employer's business. Schemes must be set up in this way in order to be exempt from income tax and capital gains tax in accordance with the Finance Act, 1972. Some schemes, notably public service schemes, operate on a pay-as-you-go basis meeting the cost of current benefits out of a current revenue in much the same way as salaries and wages of current employees. Such schemes are referred to as unfunded schemes.

Pension schemes can be divided into two basic types — defined benefit schemes and defined contribution schemes. In a defined benefit scheme the member's benefits are defined by reference to the member's salary or wage, an index, or a fixed amount. The cost of those benefits is borne either entirely by the employer (a non-contributory scheme) or by a combination of contributions by the employees themselves and the employer (a contributory scheme). Benefits on retirement at normal retirement age are typically a stated percentage of the member's pensionable salary, which may be salary at, or perhaps averaged to, retirement. The amount payable may be reduced to take account of pension entitlements acquired under statutory social insurance.

A defined contribution scheme is one in which the contributions to be set aside each year by the employer and, if contributory, by the employee in respect of each member are defined. The benefits payable under such schemes are not normally defined but are determined by reference to the amount of the defined contributions and the investment return earned on them.

I referred earlier to the fact that the development of occupational pension schemes has been encouraged over the years by tax reliefs. The requirements for tax approval have largely determined the extent to which the schemes are currently regulated. The Retirement Benefits District of the Revenue Commissioners is responsible for the approval of pension schemes under the Finance Act, 1972. Their supervision, however, is mainly limited to ensuring that tax exemptions are restricted to bona fides pension schemes and that the benefits paid and the contributions set aside to fund the promises made are not excessive, that is that the pension schemes are not being used for tax avoidance purposes.

Pension schemes with benefits provided out of separate funds are also invariably set up as trusts in order to qualify for tax reliefs. The administration of such schemes is subject to the general body of law relating to trusts and to the specific terms of the deeds under which they are established. The interests of the members are thus protected under trust law in two respects: The trust fund belongs in equity to the members to the extent that the assests are required to provide benefits for them and/or their dependants; and the trustees are answerable to the members for any losses due to fraud or other breaches of trust and are obliged to disclose information about the general state of a pension scheme, if asked to do so by the members or beneficiaries.

If members of the scheme have reason to believe that their scheme is being mismanaged, they may sue through the courts for breach of trust or for an order removing the trustees. The may also seek to have their rights to information enforced through the courts, if necessary, in accordance with trust law.

There are a number of major shortcomings in the present system. The main body of the Statute law in relation to trusts is contained in the Trustee Act, 1893, which was not passed with pension schemes in mind. The general nature of this law is such that it can be very difficult to assess if the trustees are performing properly and in accordance with trust law. If members of the scheme have reason to believe that their 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 by suing for breach of trust or for an order removing the trustees. Members also have a right to information on their schemes under trust law, but legal proceedings may also be required ultimately 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.

Even if successful action were taken against the trustees, it is doubtful if such action would redress the problems since in most such cases it is unlikely that there will be adequate funds available to the trustees. This would arise because of the: insolvency of the employer; underpayment of employers' contributions; or poor investment performance of the fund; or by a combination of such factors.

For evidence of this I need only refer to a number of unfortunate situations which have arisen over recent years. These were well publicised in the national media and concerned schemes were following the liquidation of the company, the assets were found to be deficient in terms of the members' justified expectations. Anybody who wants to know why I am so anxious to get this legislation through the Dáil and Seanad and into operation has only to think of the pensioners who appeared on television at that time literally weeping because their pensions had been lost completely. These were people who were on pension. They were not even coming up to pension. They were pensioners and they were elderly; their pensions were wiped out and lost and there was no money to cover them. This legislation will ensure that cannot happen in the future.

Another major shortcoming concerns the provision made for members of pension schemes who change jobs. The arrangements made to preserve the pension entitlements of early leavers where they move to another employment or to provide them with a transfer payment to the scheme of their new employer have been regarded as inadequate. Few schemes maintain the real value of preserved pensions. As a result 90 per cent of pension scheme members who change jobs settle for a refund of their contributions, which in many cases is well below the value of the pension entitlements they have foregone. In addition, of course, the surviving dependants of persons concerned at retirement or in the event of their premature death, may end up with a very inadequate pension.

It was against this background that the National Pensions Board was established to report to the Minister for Social Welfare 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. The first report of the pensions board made a series of detailed recommendations for the regulation of occupational pensions.

I then asked for and received the views of the various interested parties on the recommendations made. I received 21 detailed submissions, many of which took issue with various recommendations made by the National Pensions Board in their report mainly on grounds of cost or the necessity or feasibility, from an administrative point of view, of certain of the procedures recommended in the report.

In the light of the report and views received I prepared my proposals for Government. These were submitted in May 1989 and Government approval obtained for the drafting of legislation on the basis of these proposals.

In May 1989 also the board submitted their Fourth Report which dealt with the implementation of the principle of equal treatment for men and women in occupational pension schemes. That report provided me with sound guidance in drawing up the proposals for legislation in this area, which also form an important part of the Bill.

The drafting of the legislation proved to be a much more complex and time-consuming task than any of those involved had anticipated. Considerable technical assistance with the actual drafting of the legislation was given to my officials by some of the top experts on occupational pensions in this country who are, or had been, members of the National Pensions Board. After the Bill was published, further detailed submissions were received and representations made on the various provisions. These were fully taken into account by me in drawing up amendments to the Bill which I submitted and which were adopted during the course of the passage of the Bill through the other House.

This Bill, therefore, is the product of a process involving wide consultation and the harnessing of the considerable goodwill and expertise of all the various interests associated with occupational pensions in this country. As such, it is a model as to how Government can work with the various interested parties in the achievement of objectives which are for the benefit of all.

I would like to put on the record of this House my appreciation of the contributions made in this whole process by the members of the National Pensions Board and, in particular, by the experts who provided technical assistance with the drafting of the Bill and to all the interested parties who made submissions at the various stages.

In formulating my proposals, I have been careful to strike a balance between on the one hand providing adequate safeguards for the protection of members' pension rights and on the other ensuring that the continued development of pension schemes is not put at risk by over-regulation. Occupational pension schemes are voluntary and thus 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 both to 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 cost involved in a planned way. Such over-regulation could result in employers or workers deciding against setting up occupational pension arrangements or opting for arrangements that provide greatly reduced pension cover.

It was these considerations that influenced my approach to the two issues that gave rise to considerable debate in the period after the Bill was published, namely, the question of member participation in the appointment of trustees and equal treatment for men and women.

The National Pensions Board agreed that the participation of members in the appointment of trustees is a desirable objective but differed in their view as to whether it should be a statutory requirement — a majority being in favour while a minority considered that it should be encouraged only through voluntary agreement between employers and members. Given the reservations expressed on the issue, the board considered that progress towards the fulfilment of the objective should be gradual rather than immediate. For this reason the board recommended that statutory provisions in this regard should not come into operation until a period of three years has elapsed following the date of the enactment of the Pensions Act.

I agree with the National Pensions Board regarding the desirability of member participation in the appointment of trustees. However, I also had to take into account the serious reservations of employers regarding statutory requirements in this area and, in particular, their view that such requirements could be an inhibiting factor in the extension of occupational pension schemes to employments where they do not already exist.

In the last analysis the groups whose views are paramount in this regard are the employers and 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.

Accordingly, following consultations with the ICTU and the FIE, I made provision in section 62 that the Minister for Social Welfare shall provide by way of regulations for the participation of members in the appointment of trustees. It is my intention to ask the board to report to me before the end of 1992 on the necessary statutory requirements in this regard. On the basis of that, report regulations will be introduced early in 1993 in accordance with section 62, which will come into force with effect from January 1994, that is three years after the main provisions of the Bill come into force. This is in line with the majority recommendation of the National Pensions Board. I intend in the meantime to ask the new statutory Pensions Board as a priority to encourage employers on a voluntary basis to provide for member participation in the appointment of trustees, with particular reference to the procedures to give effect to this which would be most acceptable to both employers and members. This will be very much in line with the functions of the board as set out in section 10 of the Bill regarding the issuing of guidelines on the duties and responsibilities of trustees, codes of practice and standards and their implementation.

I am confident that this whole process will result in member participation in the appointment of trustees being achieved as far as possible by way of consensus between employers and members, and in a way that will not put at risk the future development of occupational pension schemes.

The Bill provides for full compliance with the terms of the EC directive in relation to equal treatment for men and women in occupational social security schemes. In line with the timescale laid down in the directive, schemes will have up to 1 January 1993 to comply in full with the equal treatment provisions in the Bill. Discrimination in contracts of employment and collective agreements must also be removed from that date. Full equal treatment will also be required by 1 January 1993 in the caes of employees' contributions, where the rates differ by reference to the use of different actuarial factors for men and women. The directive permits the deadline to be extended in the case of such differences in treatment up to 30 July 1999, but I decided not to avail of this exemption.

The directive also permits member states to defer compulsory application of the principle of equal treatment for pensionable age and survivors' benefits, at the latest until a further directive requires equality in this area. The EC Commission submitted proposals for a further such directive in October 1987. It was my intention originally to wait until that directive was adopted and then to provide in legislation for compliance with its provisions in line with the timescale laid down in the directive for such compliance.

However, the European Court of Justice in its judgment of 17 May in the Barber case appeared to rule in effect that compliance with Article 119 of the Treaty of Rome requires equal treatment in relation to retirement ages with effect from 17 May, the date of the judgment. Having studied the judgment I concluded that to permit differences in the treatment of men and women under occupational schemes in this area in accordance with the terms of the directive would be ultra vires Article 119 of the Treaty of Rome. Accordingly, equal treatment in relation to retirement ages is now required under the terms of the Bill.

I have also taken powers in section 69 (3) which will enable me as Minister to prescribe the date for equal treatment in relation to benefits for widows and widowers. It is my intention in setting the date to have regard to the timescale laid down in the next directive. If, however, within two years there does not appear to be any immediate prospect of the proposals for that directive being adopted by the EC Council of Ministers, I will at that stage prescribe the date for implementation of equal treatment in relation to these benefits. A reasonable transitional period will be allowed for before full compliance is required.

The approach I have adopted will result in the progressive implementation of the principle of equal treatment for men and women in relation to occupational schemes. It will enable employers and/or trustees to meet in a planned way any extra costs arising from the implementation of equal treatment and ensure that entitlements already acquired by existing members, both men and women, are protected.

Given the length and complexity of the Bill, I do not propose to give a detailed account of its contents. I will instead give a general overview of the main provisions of each of the seven Parts with reference to those areas which are of major importance.

Part I of the Bill contains the usual general provisions and calls for few remarks except in relation to section 3. That section provides for offences and penalties for contravention of the provisions in the Bill. This section also provides that a prosecution for an offence may be instituted by the new statutory Pensions Board to be established under Part II. This is a very important provision. At present virtually all pension schemes are subject to the safeguards of trust law. However, as I mentioned earlier, those rights can only be enforced by members instituting proceedings in the High Court, if they are prepared to meet the risks of litigation.

Under the Bill it will now be possible for an aggrieved member to request The Pensions Board to take an action on his/her behalf against defaulting trustees or employers, rather than rely on his/her own resources. From the member's point of view this is a significant development as it affords them a readily accessible means of redress. This is a very important element of the Bill. It is of importance to members in relation to the protection of their rights. It gives them very easy access to the redress available.

Part II of the Bill provides for the establishment of a new statutory board, An Bord Pinsean — The Pensions Board.

The rules governing the appointment of members of the board are provided for in the First Schedule, referred to in section 9. It is essential the board is composed of members who between them have the necessary experience and expertise to carry out the functions of the board. For that reason paragraph 8 of the First Schedule specifies that the ordinary members of the board shall include representatives of the trade unions, employers, Government and the various professional groups involved with occupational pensions.

Many of the organisations and interests to be represented by one member of the board made representations to me since the Bill was published seeking increased representation. If I were to meet the wishes of all the interests involved the board would become too large and unwieldly and this could lead to delays in the decision making and the general effectiveness of the board. Accordingly, I am reserving the right to directly nominate three ordinary members of the board, in addition to those representing the various interests. I am satisfied that this is the best approach. It will enable me in the light of all the representations made to choose the most appropriate persons to make up the full complement of 12 ordinary members, provided for in paragraph 2 of the First Schedule. At the same time the size of the board membership is maintained at a reasonable level.

Section 10 sets out the general functions of the board. The primary functions of this new body will be to supervise the implementation of the new legislation. It will also have an advisory role to the Minister for Social Welfare on pension matters generally and on appropriate standards for occupational pension schemes.

To fulfil its role it is essential the board has the necessary powers and resources available to it. Sections 15 and 16 enable the board to appoint a chief executive and employ its own staff. Section 18 provides the new board with the necessary powers to carry out inspections of a pension scheme's books and records and obtain all the relevant information relating to the affairs of a scheme.

Section 25 provides for the imposition of fees on pension schemes. I would like to emphasise the purpose of these fees, which were recommended by the National Pensions Board, is to meet the administrative expenses of the new board. The scale of the fees and the for their determination will be set down in regulations under this section. The level of the proposed fees will be determined by me in consultation with the members of the new board.

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 this can be best achieved by having the administrative expenses financed by the occupational pension schemes. They will have a direct and ongoing interest in the successful and cost effective operation of the board. In addition, given the scale of the tax reliefs available to occupational schemes, I do not consider taxpayers should also be asked to finance the cost of the regulatory system for the protection of members' pension rights.

Section 26 sets out detailed procedures in relation to the determination of disputes by the board. The Bill, as originally drafted, made provision in the First Schedule that the board should regulate by standing orders or otherwise such procedures. I decided, however, that, in view of the significance of many of the board's determinations concerning matters involving pension schemes, detailed procedures should be laid down under this Part of the Bill dealing with the establishment of the Pensions Board.

I referred earlier to the fact that one of the major shortcomings in the present arrangements for occupational pension schemes is that few private sector schemes make adequate provision to protect the pension entitlements of those who change jobs, particularly in relation to maintaining the real value of these entitlements. As a result, many members who leave to take up other employment settle for a refund of their contributions. This results in the pension entitlements they have acquired on reaching retirement being considerably less than their periods as members of pension schemes should have conferred.

Lack of protection of pension entitlements on leaving can also be a margin barrier to mobility between employments, particularly in the case of persons aged from mid-30 upwards. At this stage people are much more conscious of pension cover and of their responsibilities for dependants. It is essential today to have adequate pension cover in view of the fact that people are living much longer in old age and the rising costs of maintaining a decent standard of living after retirement. Today's 30 year olds must on average plan realistically for some 15 years of retirement and possibly more.

Having examined the present arrangements and their shortcomings, I have decided that the best way forward would be to introduce a proper system of preservation of pension rights with an option to transfer the equivalent value of members' entitlements to another suitable scheme. Accordingly, Part III of the Bill contains the necessary provisions for the protection of members' pension rights in the event of their leaving a scheme before normal retirement age.

Section 28 of the Bill provides for a statutory entitlement to preserved benefit in respect of service after the commencement date in the case of a member who leaves a pension scheme before retirement age, provided he satisfies the following minimum qualifying service requirements. He must have at least five years qualifying service of which at least two years fall after the commencement date. The requirements in this regard are simple to operate and are broadly in line with current practice.

Sections 29 and 30 deal with the levels of benefit to be preserved. A distinction is made in the Bill between benefits provided under defined benefit schemes and those under defined contribution schemes. In the case of the former, schemes will be obliged to preserve an appropriate part of any benefit earned for service after the commencement date. In the latter case the amount of preserved benefit shall be equal to the actuarial value of the contributions accumulated on behalf of the member at the date of payment in respect of such service.

Under section 32 of the Bill refunds of members contributions will no longer be permitted for periods of service in respect of which members are entitled to preserved benefits. This is essential, since to do otherwise would not result in any improvement in the existing situation. These provisions also apply to any additional voluntary contributions made by the member.

I wish to emphasise the preservation requirements only apply to service after the commencement date. This means members will still be entitled to opt for a refund of contributions paid in respect of periods up to that date, January 1991. Moreover, refunds of contributions will also be payable in respect of periods after that date, in cases where members do not fulfil the qualifying service requirements for preservation, e.g. less than five years in the scheme.

A number of pension scheme members, who intend leaving full-time employment early, for example, on marriage or to look after their children on a full-time basis, have planned to opt for a refund of their contributions to help finance house purchase or other expenses associated with setting up a home. They have expressed concern that this may no longer be possible. I wish to take this opportunity to assure them that contributions paid to date will not be affected by the provisions concerning preservation.

A system of compulsory preservation on its own would do little to solve the problem of the "early leaver". Any proposal which hopes to achieve a real and meaningful improvement in this area must incorporate a provision whereby preserved benefits are revalued between the date of leaving and eventual retirement. Otherwise, the preserved pension loses value in real terms. Section 33, therefore, makes provision for a minimum revaluation of preserved benefits from a date five years after the commencement date or the date of leaving if later, up to retirement age.

The minimum annual rate of revaluation proposed in the Bill is the lesser of the increase in the consumer price index or 4 per cent per annum. The National Pensions Board had proposed in addition that where the rate of inflation is greater than 4 per cent but less than 10 per cent an additional increase of half the excess over 4 per cent should be provided thus giving a maximum increase of 7 per cent. Many of the interested parties whom I consulted felt that the board's formula for revaluation was unduly high and would in any event give rise to very real practical problems for pension schemes. For example, trustees of a scheme may wish to purchase a deferred annuity contract for an early leaver to be revalued in accordance with the requirements laid down in legislation. However, insurance companies are only geared to providing such contracts at fixed rates of revaluation. There are no contracts available on the market at present which will automatically revalue in relation to a variable rate of inflation. It would also cause difficulties for schemes in their efforts to satisfy the proposed new minimum funding requirements under Part IV.

I believe that the proposed revaluation formula set out in section 33 is a reasonable compromise. It is easier to administer and is aimed to fully match any increase in inflation up to 4 per cent. Provision is made in the section to vary by regulations the 4 per cent ceiling if this is found to be necessary. I would like to stress that this proposed rate will be the statutory minimum requirement. If schemes can afford to do better then there is nothing in the Bill precluding them from doing so.

I would also like to refer to the fact that in accordance with subsection (1) revaluation will not commence until five years after the appointed date, i.e. the year beginning January 1996. This is fully in line with the recommendations of the National Pensions Board in this regard, which was based on the need to give schemes time to make adequate funding arrangements for revaluation. I would like to explain exactly what this will involve. If a person leaves a scheme in the year 1993, the first year in which members will actually become eligible for preservation under the terms of the Bill, he will be entitled to have his pension rights in respect of the two year period 1991 to 1992 preserved, provided, of course, he has been a member of the scheme for a total of five years. Revaluation of this preserved benefit will commence just three years later — from 1 January 1996. If a person leaves the following year, in 1994, revaluation will commence two years later, and if he leaves in 1995, revaluation will commence just one year later. Revaluation will commence straight away for members leaving from 1 January 1996 onwards.

Accordingly, the five years waiting period will not have a significant impact either in terms of the amount of pension involved or in terms of numbers affected. However, the National Pensions Board considered that this five year waiting period was essential from the point of view of funding and this has been confirmed by the representations I have received from pension experts in the period since the board's report was published.

Section 34 of the Bill gives a member of a funded scheme who builds up an entitlement to a preserved benefit the right to take a transfer payment as an alternative to his preserved benefit entitlement. The transfer payment shall be the equivalent to the actuarial value of the member's preserved benefit including an appropriate element for revaluation. A member may choose to have the transfer payment made to the scheme of his new employer or used to purchase a deferred annuity contract from a life office.

Section 37 enables the Minister to make regulations excluding from the application of the proposed preservation requirements schemes already having a comparable system of preservation and revaluation for early leavers under their own rules. 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. Persons who leave such schemes before normal retirement are already entitled to preserved benefits. Revaluation of preserved benefit entitlements under such schemes is linked to salary increases which are normally more favourable than the formula linked to increases in consumer prices as proposed in the Bill. It is not proposed, therefore, to change the basis of revaluation for such schemes in order to comply with the new requirements. There is also in existence an extensive transfer network whereby full credit for past service is provided to employees moving within public sector organisations.

Many current scheme members who intend to remain in full-time employment but may wish at some future date to change jobs have expressed concern that no provision has been made requiring preservation in respect of periods prior to the commencement date. I wish to stress in this regard that the National Pensions Board estimated that the cost of preservation in respect of future service on the basis of the conditions they recommended would approximate at most to 1 per cent of pensionable salaries and would be substantially less in the case of schemes with a relatively low level of membership turnover. The overall cost of preservation on the basis of the conditions set out in the Bill is likely to be marginally less, given the fact that the conditions are somewhat more restrictive than those recommended by the pensions board. Moreover, one of our leading actuaries has estimated that the additional cost of extending the preservation provisions to the past service of existing scheme members may not amount to more than 0.5 per cent of pensionable salaries. In view of these considerations I would urge employers to follow the lead given in the Bill and provide for preservation in respect of past service rights where this is the wish of members. It is not my intention at this stage to make this mandatory but I will be keeping the situation under review.

Trustees and sponsoring employers will have a variety of options open to them to meet the costs of preservation. Some schemes will have no difficulty in meeting these costs given the favourable rates of investment return in recent years. Others could increase the contributions from employers and employees or both. Non-contributory schemes could be changed to contributory ones or changes could be introduced in the scheme's benefit structure by, for example, taking social welfare benefits fully into account or changing the benefit formula. There are various ways by which schemes can meet the cost of preservation but this would, in the first instance, be a matter for the schemes themselves.

I would now like to turn to Part IV of the Bill which provides for the introduction of a funding standard. The main objective of the new funding requirements is to prevent employers from making pension promises which they are unlikely to be able to afford and to enhance the security of the promises already made.

Section 41 provides that the new minimum standard shall apply to all defined benefit schemes. Scheme trustees will be required to submit to the pensions board at regular intervals actuarial funding certificates prepared by the actuary to the scheme. These certificates will certify whether or not the standard is being adhered to.

An initial actuarial funding certificate will be required within a period of three years after the commencement date. I propose that this commencement date will also be 1 January 1991. This certificate must state that sufficient assets exist within the scheme to cover 100 per cent of the liabilities relating to pensions in the course of payment, additional voluntary contributions made, transfer value entitlements and the benefits which have accrued in respect of post-commencement date service. The latter benefits are those which must be compulsorily preserved in respect of future service under Part III, including appropriate provision for revaluation. It will also need to certify the degree of solvency achieved in respect of accrued benefits relating to service prior to the commencement date.

Subsequent actuarial funding certificates must be submitted every three and a half years after the effective date of the previous certificate. Certificates which have an effective date not more than ten years after the commencement date will, in effect, be required to certify that the solvency level of the scheme has not deteriorated in the meantime below the level initially certified.

After a transition period of ten years every defined benefit scheme will be required to have reached a funding standard which will enable it to fully discharge the accrued benefit expectations of its members. Accordingly, certificates which have an effective date more than ten years after the commencement date will need to certify that total assets at that date are at least sufficient to secure 100 per cent of all the liabilities of the scheme.

The proposed funding standard provided under section 44 differs from that recommended by the National Pensions Board, in that full protection is given to the entitlements of current pensioners. From the beginning schemes must certify that there are adequate assets in the fund to provide for the benefits of current pensioners in respect of service prior to the commencement date as well as service after that date. In the event of wind-up, provision is also made for the first priority to be given to current pensioners. Under the board's original proposals circumstances could be envisaged whereby these benefits could be put at risk in the event of a winding-up in order to fully secure other benefits provided under the scheme. I am glad to say that under the provisions of the Bill benefits paid to pensioners are to be given maximum protection and must be fully funded at all times. I am quite certain Senators will fully support me in taking that action in order to protect in every possible way pensions of current pensioners. The funding standard will not add to the overall cost of benefit provision — no augmentation of benefits levels is imposed and by definition, no additional financial commitments arise. However, they will have an impact on the pace of funding for many schemes because of the need to accelerate contribution payments to conform with the solvency targets. The effect on existing contribution levels will depend on the funding policy currently adopted for each scheme. The general impression within the pensions industry is that the funding policies adopted by the majority of schemes are such that compliance with the proposed new standards should not give rise to any significant extra costs.

It is interesting to note that the accounting bodies have recently taken an interest in this area and have recognised the importance of pension liabilities within company accounts. They have recently published a Statement of Standard Accounting Practice No. 24 dealing with disclosure of pension costs in the accounts of employers. The provisions of Statement of Standard Accounting Practices No. 24 apply in full to Irish registered companies which are quoted on the UK and Dublin Stock Exchanges for accounting periods commencing on or after 1 July 1988. Non-quoted Irish companies will be obliged to implement in full the financial provisions of the standard during the accountancy period which commences on or after 1 January 1993.

Statement of Standard Accounting Practice No. 24 adopts as its basic objective that the costs of pensions should be charged against an employer's profits on a systematic and rational basis over the period during which the employer derives benefit from the employee's service. This requires the actuarial assessment of an annual pension cost for a defined benefit scheme which is expected to remain substantially level over a period of time.

Statement of Standard Accounting Practice No. 24 does, of course, deal only with the recognition of pension costs in company accounts and does not have any direct effect on the funding programme which the employer adopts for his pension scheme. Nevertheless, it seems inevitable that in most instances the Statement of Standard Accounting Practices No. 24 pension costs will be reflected in actual contribution payments to the pension scheme. The Statement of Standard Accounting Practices No. 24 provisions, therefore, require the adoption of funding policies for pension schemes which are fully in line with the requirements of the Pension Bill.

Part V of the Bill deals with the disclosure of information in relation to pension schemes. It is often said that occupational pension rights are the biggest investment an employee holds; worth far more than any investment he controls personally including even his home. It is only right, therefore, that full information is available to the individual about this major asset. Indeed, the view has been expressed that many of the difficulties experienced to date in relation to pension schemes result from a lack of information on the part of scheme members.

I have already referred to the serious deficiencies in the legal protection afforded to members in this regard and to the fact that one of the main objectives of this Bill is to provide members with effective and comprehensive rights to obtain full and necessary information in relation to their pension scheme. There are two broad requirements provided for in this area. First, the trustees must obtain specified financial and actuarial information on the scheme under their control. Secondly, the members must be provided with adequate information to enable them to satisfy themselves about the running of the scheme, its financial soundness and the security of their benefit entitlements.

Sections 54 to 58 set out the general disclosure requirements and provide that the more detailed requirements be covered by regulations. Some commentators have expressed disappointment at the lack of detail concerning the new requirements and the difficulty of assessing their effects on individual pension schemes. I was very much guided by the National Pensions Board in this regard which recognised that the requirements in this area by their very nature, would, be fairly detailed and may not be appropriate to primary legislation given that their application to particular types of schemes would have to be kept under constant review. They recommended that the more general requirements should be set out in the Act with provision for the more detailed requirements to be included in regulations. In drafting the Bill I have adopted this approach. It is my intention as soon as the Bill is enacted to publish the more detailed requirements in regulations. In this respect there will be a requirement to publish quite a number of regulations. We hope to have them ready in the autumn so that the Act can be implemented before 1 January 1991. Various detailed regulations will have to be drafted.

During the course of our consultations on the board's proposals, it became clear that there is widespread agreement on the need for full disclosure of information along the lines recommended by the board. Therefore I intend to waste no time in bringing these into effect. For the benefit of Senators I would like to set out clearly what these requirements entail. Different requirements will need to be set for different types of schemes. For example, essential information only will be required from unfunded schemes and there will be reduced requirements for defined contribution schemes and schemes with fewer than 50 members.

Section 56 requires trustees of schemes to obtain at periodic intervals actuarial valuations and audited accounts. In the case of defined benefit schemes an actuarial valuation must be carried out every three-and-a-half years. This is in line with current good practice. The actuarial funding certificate to be prepared for the purposes of the new funding standard will be completed at the same time as the actuarial valuation. The valuation must be carried out by a qualified actuary, whose report must be made available for inspection by members and their trade union representatives.

It shall also be a requirement for schemes to produce annual audited accounts prepared by a qualified auditor. Surprisingly, there is no current legal requirements for pension schemes to have an independent audit of their accounts. The objective of the accounts shall be to give employers and scheme members a true and fair view of the nature and magnitude of the financial transactions of the schemes for the scheme year and the nature and disposition of its net assets at the accounting date. Therefore the audited accounts will outline the financial assets and liabilities of the pension scheme and the way in which the trustees have discharged their stewardship responsibilities during the period. Unfunded schemes, death benefit schemes and frozen schemes will be exempt from these requirements.

In recent years there have also been developments in accountancy practice, relating to pensions accounting and disclosure. A Statement of Recommended Practice — SORP I — on pension scheme accounts was issued in May 1986 by the Accounting Standards Committee. This statement represents the accountancy profession's guidance on current best practice on the form and content of such accounts. Although it is not mandatory, pensions schemes are encouraged to follow it. Our detailed requirements in this area — which I propose to outline in regulations — will be similar to these professional guidelines. Accordingly, schemes which already follow the guidelines should have little difficulty in complying with the regulations. In fact, it will be a requirement for the accounts to contain a statement that they have been prepared in compliance with the professional guidelines and, if not, to provide an indication of material departures from this.

Section 55 requires trustees to provide an annual report in respect of each scheme year after the commencement date. This report shall normally consist of: a report by the trustees; an investment report; the audited accounts; a copy of the latest actuarial funding certificate.

The report of the trustees shall include basic information in relation to the scheme such as: (a) the names of trustees and any other persons or organisations acting for the scheme such as actuaries, auditors, solicitors and investment managers; (b) a statement of the number of members, pensioners and persons with preserved benefits; (c) a statement of any amendments to the scheme over the past year; (d) details of any increases in pensions granted during the year or of any ex gratia payments made, and (e) a review of the financial developments of the scheme and likely anticipated future developments.

The investment report shall include a statement of the investment policies pursued during the year and any material changes in these policies during the year or in comparison with the previous year. A comment on the investment performance of the fund shall also be made.

I would like at this stage to mention the work done by the Irish Association of Pension Funds because they have been encouraging the preparation of reports and, at this stage, quite a number of schemes are producing very excellent reports. They have also introduced awards for these reports which is, again, to encourage the preparation of the kind of report we are looking for here. The industry itself has set a headline here, but this will of course become a general requirement.

As I mentioned earlier, there will be reduced requirements for defined contribution schemes and smaller schemes with fewer then 50 members. As recommended by the board, these will be less onerous than the full details I have just outlined. In place of the full requirements for annual trustee reports and annual audited accounts, such schemes shall have the option of issuing a shortened report prepared by either an independent accountant or the insurance company managing the scheme. This report shall include the following information: (a) a general statement indicating the basis on which contributions to the scheme are calculated; (b) a statement indicating how the assets are invested including the extent of any self-investment or concentration of investment; (c) confirmation that the contributions paid in the relevant period represented the amount due as set out in (a) above (or alternatively a note of the amount received where this is different from that due); and (d) in the case of "small" defined benefit schemes, a copy of the most recent actuarial funding certificate.

I would like also to refer to section 54 which is an important provision in itself. While sections 55 and 56 impose obligations on trustees to produce annual reports and other financial documents, section 54 places a general requirement on them to disclose these to members, prospective members, their spouses and trade unions representing the members, together with a comprehensive range of additional information. This additional information shall include: details about the constitution and rules of the schemes certain basic information about the scheme, and details about an individual's benefit entitlements and options under the scheme.

Some concern has been expressed about the cost of implementing these disclosure requirements, in particular the administrative costs. I do not consider that the costs involved will be significant in terms of the resources of many schemes. Many schemes already provide their members with comprehensive information. Those which follow good practice will find they have little or no extra burden to bear as a result of the legislation. Moreover, the option of shortened reports for smaller sized schemes will go a long way towards mitigating any extra costs for such schemes.

Combined with the new minimum funding requirements in Part IV, I believe that these new measures will greatly enhance the security of members' pension rights. It will improve the rights of members to access to information on the level of funding of pension schemes and thus the extent to which future benefits are secured. Members will be much more aware of their rights under the schemes and the basis on which their pension expectations are founded. It will also enable them to satisfy themselves that schemes are being run in their best interests.

Part VI of the Bill contains a number of specific provisions affecting trustees of pension schemes. I have already dealt at length with the provision made in section 62 which enables me as Minister to provide by way of regulations for member participation in the appointment of trustees. I would, however, like to refer briefly to the fact that section 62 does not contain any specific references to the size of schemes to which these regulations will apply. The National Pensions Board in their report stated that the right to member participation in the appointment of trustees should be confined to schemes with more than 50 members. I believe this is a rather arbitrary limit and I will be asking the new board to examine ways in which members of all funded schemes, irrespective of the size of the scheme, can be given rights to participate in the appointment of trustees.

In regard to duties and responsibilities of trustees, I have already referred to the absence of any specific statutory provision governing the duties of pension scheme trustees. Such duties are subject to general trust law and to the trust deed of the pension scheme. The only general obligation on trustees is to look after and manage the trust assets and to use them to make provision for the beneficiaries. It can, therefore, be difficult to assess if the trustees are performing properly in accordance with trust law. Furthermore, if members believe their scheme is being mismanaged, the only redress currently is through the courts by suing the trustees for breach of trust or for an order removing the trustees. Such a case would normally be heard by a Chancery Judge of the High Court and the substantial costs involved would normally make it prohibitive for members to contemplate such action.

The Bill deals with both these shortcomings. First, it clearly defines the duties and responsibilities of pensions scheme trustees and, secondly, it provides an appropriate means of redress for the individual member. Section 59 outlines the main duties of trustees as follows: (a) to ensure that the contributions due to the scheme are paid into the fund and are properly invested; (b) to ensure that the benefits of the scheme are paid as they become due; (c) to ensure that proper membership and financial records are kept.

In regard to non-compliance by trustees, section 3 of the Bill, to which I referred earlier, provides that trustees who fail to comply with the new requirements will be guilty of an offence which shall be punishable by a system of fines or terms of imprisonment. Section 63 in this Part of the Bill provides that the High Court may order the replacement of the trustees, if following a request made to it by the pensions board, it considers that such action is necessary in the interests of the members of the scheme.

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 its power to take legal proceedings on behalf of the member against the defaulting trustee or any other culpable person.

Part VII of the Bill provides for the implementation of the principle of equal treatment for men and women in occupational benefit schemes. I explained earlier the approach I adopted in relation to this issue, particularly, in the light of the judgment of the European Court of Justice in the Barber case. Accordingly, I will now confine myself to giving a general overview of the main provisions in this Part.

The main schemes covered are occupational pension and sick pay schemes and long-term disability schemes. Optional benefits, single member schemes and personal schemes are excluded in line with the provisions of the EC directive in this regard.

The provisions in the Bill will override any differences in the treatment of men and women in occupational schemes in relation to eligibility for membership; the obligation to contribute; levels of contributions payable by members and employers, and benefit rights. There are special safeguards for those absent from work by reason of maternity or for family reasons.

I would now like to refer to a number of other provisions of this Part which may be of interest to Senators. Section 65 defines the term "occupational benefit scheme". This definition includes occupational schemes other than occupational pension schemes such as occupational sick pay schemes and long-term disability benefit schemes. Section 69 outlines specific exemptions from the principal of equal treatment. The most notable of these is in subsection (1) (d) which refers to survivors benefits. However, as I have already indicated, provision is made in subsection (3) enabling me as Minister to provide by regulations that this provision will cease to have effect on such date as may be prescribed.

Section 71 of the Bill deals with the implementation of the principle of equal treatment. It provides that where any rule of a scheme does not comply with the principle it will be overridden by this Part of the Bill and the more favourable treatment provided to persons of the one sex shall be provided to persons of the other sex. Subsection (3) also provides that schemes will have up to ten years to provide for equal treatment in respect of rights and obligations incurred under the scheme prior to the commencement date. Trustees of schemes or, where appropriate, the employer shall be obliged to take the necessary steps to ensure compliance.

Sections 75 to 80 deal with the resolution of disputes in regard to equal treatment. In this connection a clear distinction is made in sections 75 and 76 between those concerning occupational pension schemes and those involving other types of occupational benefit schemes. In the case of pension schemes it is proposed that disputes between members and trustees/employers will be determined by the proposed new pensions board along the same lines as those applicable to the other requirements contained in the Bill. The procedures for dealing with such disputes are provided for in section 26 to which I have already referred. Failure by any party to comply with the principle will be an offence under section 3. It is proposed that disputes concerning other occupational schemes will be dealt with by equality officers and the Labour Court on the same basis as for equality of treatment in the employment field. The procedures for the resolution of such disputes are set out in sections 77 to 80 and are similar to those contained in existing equality legislation that is, the Employment Equality Act, 1977, and the Anti-Discrimination (Pay) Act, 1974.

I hope the House has found my explanation of the objectives of the Bill and of its major provisions useful and helpful. Due to its length I regret I was unable to go into more detail but I will try to respond to any points or queries raised by Senators in my reply to the debate.

This is major and historic legislation. I believe it strikes the right balance between the need to provide for adequate safeguards for members' rights and expectations under pension schemes and the avoidance of over-regulation of such schemes which could jeopardise their future development.

Accordingly, I commend the Bill to the House.

I welcome the Minister to the House. The last time he was with us we had a long and productive discussion of over ten hours on the Social Welfare Bill. I remember that debate well; it was productive and interesting and I was disappointed to have it recalled this morning as a precedent in another context. In fact, while the debate on that Bill was short it was positive and non-contentious and for the Leader of the House to compare this either with the Broadcasting Bill or the Insurance Bill and quote it as a precedent for such Bills going through the House is unfair.

The Pensions Bill is also non-contentious to a large extent and I commend the Minister for introducing it. In welcoming the Bill, I must say it is long overdue legislation to control the funding and administration of private pension schemes. I compliment the majority of employers who operate effective and comprehensive pension schemes. For their employees their pensions are an integral part of their remuneration package and it becomes more important as one gets closer to retirement age to have such schemes in operation. It is the employees' property left in trust with the employer or with the trustees selected by the employer and such trustees, for the most part, are efficient and professional in carrying out their duties. I have had dealings over 20 years with organisations such as Irish Pensions Trust Limited who do an excellent job in this respect. However, such companies report to the employer and are subjected to the employer's views and do not often have the balancing views of the owners of the pension funds, the employees themselves.

A small number of employers have given the majority a bad name and this is very unfair. This Bill seeks to ensure that an unsatisfactory situation does not recur. Responsible employers have nothing to fear from the Bill. It will ensure that doubts which arise about the status of the funds, even in the enterprises which are above board in their approach, do not arise. It will eliminate the temptation for enterprises in financial trouble to raid the pension schemes funds in order to obtain short-term working capital. When this happens and the company do not recover from their difficulties and go into liquidation, the cupboard is bare and the employees who have accrued benefits over their working life with the company are left stranded. That is most unfair; it is fraudulent.

I know of a specific case where a senior manager in an organisation came to retirement age and because of his value to the company he was requested to stay on for a further three years. Two years afterwards the company went into liquidation. The pension fund had been plundered and this unfortunate individual was left without a pension, even though he had expected to have an increased pension because of deferred payment of his pension at 65 years of age. This was devastating and cruel and left this man without benefits which were his rightful property. It is akin to daylight robbery. Likewise, many employees within five and ten years of retirement found their standard of living reduced dramatically and their aspirations for a decent standard of living post-retirement destroyed. The Bill before us is designed to ensure that such a situation will not arise in the future.

The Bill will regulate the administration of pension schemes. It will ensure that proper funding is made to meet the liabilities of the scheme. It will provide a check to ensure that the small minority of unscrupulous employers do not raid and plunder funds when difficulties arise or place the transfer of funds from the organisation to the scheme at the bottom of their liabilities to be met. The Bill also provides that a person may change jobs without forfeiting his pension. It had become more common for people to move from one organisation to another but due to the present level of unemployment and lack of employment opportunities it is much rarer in recent times to move from one organisation to another.

However, in the past ten to 12 years movement between organisations has been recognised as a developmental and promotional medium. It is an advantage for a person when applying for a job to have experience of several organisations. This gives one a broader perspective in regard to discipline and provides a promotional outlet for those who do not have the opportunity to reach their potential in their present organisations. This is acceptable to both the new and old organisations as it allows for movement and opportunities for staff as well as giving an external new view on problems and potential developments in the organisation.

One should not have to forfeit one's credits when changing jobs. Many schemes now have vested rights after ten years. This is welcome despite its limitations and the Bill deals with this new improved situation. The Bill will change the position in the long-term by ensuring full occupational pensions for a far greater number of employees by allowing the pensions paid in different employments to be transferred or preserved. I have a preference for the transfer of pensions as this would allow an employee's benefit of years of service at a lower paid employment to be applied to his retirement pensionable salary or wage. In most cases this would be of more benefit to the individual employee.

We have to be careful that we do not create a situation where an employer will find it unattractive to recruit an employee because of the cost of funding the pension. This might be especially so if the employee is in excess of 50 years of age where generally the cost of funding is more expensive. We must not discourage employment or the transfer of people over 40 or 50 years of age. In recent years such people have been discriminated against and we must ensure that the Bill does not further exacerbate this problem. Perhaps the choice of transfer or preserve of pension rights in the event of job mobility should be left to the individual employee, with the agreement of the new employer.

The marketability of an individual could be a factor in this approach. In some circumstances an employer may want every available card in his hand to attract a good employee to his organisation. Because of the high level of employee mobility at a younger age, it may be appropriate to consider a minimum age at which the provisions of the Bill would apply. At present maximum pensions are paid to people with 40 years service in a pension scheme. If this was reduced to 35 years service, funding would not commence until he reached 30 years of age. This would mean that the provisions in the Bill would not apply to those under 30 years. This would help to allay some of the fears felt about the Bill.

The downturn of this might be that unscrupulous employers would only employ people who are younger than 30 years and devise means, some of which are very apt, where their employees would be outside the provisions, in other words, all their employees would be under 30 years of age. This would further encourage age discrimination. I would welcome the Minister's views on this point.

I welcome the provisions in Part III of the Bill. I have direct experience of workers who, on leaving their firms, cashed in their contributions rather than opting for deferred benefits. I know people up to 60 years of age who have done this. In most cases they hand back double the amount they have received to the employer. They do this because of a lack of confidence that they will receive their benefit at the normal retirement age. Unfortunately, this has been confirmed on too many occasions. This Bill will give people the confidence to allow their entitlements to be deferred and so enjoy the benefits when they reach normal retirement age.

Part V of the Bill will assist in the creation of confidence in the operation and administration of schemes. The requirement in regard to the disclosure of information is important. This is a delicate area which requires careful handling. The adage that a little information can be dangerous can be applied in the context of information which is not understood and which can be dangerous. The training of staff and trustees so that they will fully understand and appreciate such information is very important.

The funding of pension schemes is very complex and difficult for anyone not trained in the financial area. There will be a duty on employers and trade unions to ensure that information revealed is not misunderstood or misrepresented. I understand the concern of employers in this regard. Employers in modern business are so busy trying to survive commercially that the extra burden of trying to explain the details of a complex pension scheme will create further difficulties for them. Many managers will have difficulty in understanding these details themselves.

The training of trustees and members will be a key issue in the success of the Bill. The State must assist in this training. The Minister should have discussions with his colleague, the Minister for Labour, to formulate plans which will assist in this training. FÁS can play a key role in providing the necessary courses for this training. Many managers and supervisors will need to have their skills updated and assistance must be given to ensure that courses are not expensive. The Government should use FÁS, the Irish Management Institution, the Plassey Management and Technology Centre and other training agencies to do this. Union officials will also require to have their knowledge updated and unions will be required to run courses for shop stewards who will be a key medium in conveying the details of the schemes to their members. I cannot over-emphasise the importance of this training.

The Government have a responsibility to prepare all sides of industry for the new arrangements. Failure to do this will create misunderstanding, misrepre-representation and misuse of the information disclosed. There is no evidence to suggest that the Government understand the serious implications of this. The requirement in the Bill to train trustees is very important. However, this requirement, while welcome, is inadequate. The receivers of the message must understand the message to ensure good communications. I look forward to hearing the Minister's response to this point.

The success of the Bill will depend on members and trustee members studying and understanding the information produced annually. I presume that any queries about schemes will be submitted to the National Pensions Board as any other approach to scrutinising the 2,500 schemes which will be registered with the board would be unrealistic and the cost prohibitive. If there is a lack of understanding of the information disclosed the result will be twofold: (1) a failure to submit schemes which require scrutiny and (2) the submission of schemes because of fear and lack of trust rather than any defect in such schemes. This could neutralise the proper use and role of the pensions board.

The change to allow members of the pensions board to sue the trustees in an attempt to have them removed and replaced is progressive. The present situation requires a member or members of the scheme in trouble to do so at enormous personal cost. It appears that the cost of running the new pensions board will be borne by industry, which is a matter of concern. While the expenses can be paid by the Minister they can also be paid by way of levy on individual funds. I am concerned that such a charge would encourage the growing practice of some employers of removing pensions as part of their compensation package or discourage new employers from setting up such schemes in the first place.

Most pension schemes include life insurance coverage. Many employees depend on this for family protection, they do not see the necessity for private insurance. Difficulties arise when such people are made redundant and are unable to obtain pensionable employment subsequently. Some cannot afford to take out insurance because of other direct financial commitments like mortgages and so on. Others are ineligible because of illness or age. This is a very serious loss and very distressing to those already in a stressful state. The Minister should look into this in the context of the Bill. He should also include the proper administration of income continuance plans with are often part of the benefit package of employees in line with their pension scheme.

With regard to the First Schedule, I note that nine members, respresentative of eight different areas, will be on the pensions board. It is regrettable that the Irish Personnel Management Institute are not represented. The members of this body negotiate and communicate details of schemes to employees daily. They are in the front line when difficulties arise or when members of schemes require clarification. Personnel managers will play a key role in ensuring that the Bill is a success in communicating the details, difficulties and the status of their schemes to shop stewards, union officials and their employees.

The major gap in the Bill is that it does not cover the self-employed and farmers and will not improve the lot of the old who live on very inadequate incomes. There are approximately half a million people on pensions in Ireland. Life for many of these is of poor quality; they have an inadequate income, especially those who do not receive even a non-contributory pension. They are forced to work on small farms or in small businesses until they are very old. Many of them, while having valuable assets, such as a home, are not prepared to sell as this may have been in their family for generations and they are not prepared to make changes which would allow them to receive a non-contributory pension. Regardless of their housing conditions they suffer loneliness, isolation and the growing threat of being robbed, attacked, injured or even murdered by the thugs who roam the countryside. Often those who attack old people are on bail having been charged with a similar crime. These old people in the country — and indeed, in the city — experience at first hand the effects of health cuts; they feel abandoned by the State and, unfortunately, a growing number have been abandoned by their own families.

In welcoming the Bill I note that the changes suggested are a reasonable response to the Fine Gael demand in March for legislation to introduce mandatory disclosure of information to scheme members, minimum funding standards, actuarial valuations and annual reports and accounts. I welcome the Bill and again commend the Minister for introducing it to the House.

Ba mhaith liom fáilte a chur roimh an mBille seo agus, chomh maith, fáilte a chur roimh an Aire go dtí an Teach seo. Is cosúil go mbíonn sé linn an cúpla lá deireanach de chuile théarma agus Billí tábhachtacha aige a dhéanfaidh leas mórchuid daoine sa tír seo.

It sometimes amazes me that legislation which affects hundreds of thousands of people does not excite the same interest as more newsworthy legislation. The debate normally on these matters may not be as comprehensive and detailed as that on issues which seem to hit the headlines. However, this Bill is of major importance to every pension contributor. It will in the long-term ensure that their rights are upheld and that money contributed now will be available when they reach retirement age.

As the Minister said, this legislation will affect 550,000 employees and their dependants; it very much follows in the Fianna Fáil tradition of looking after widows, orphans, dependants and people on social welfare.

Not forgetting the Coalition who brought the age of retirement down to 66 in 1975.

No interruptions, please.

It is a pleasure for me to lead the debate on the Fianna Fáil side on this legislation. As I mentioned earlier, this year there were major initiatives in the social welfare code such as the carer's allowances, the lone parent's allowance and the setting up of the social welfare appeals office as well as changes in the means test and in the free schemes.

As the Minister pointed out most of the legislation dealing with pension schemes is based on 19th century trust law. With the scale of the schemes that are there now, it is time this was reviewed to ensure that pension schemes meet modern requirements. Everybody has a longer life expectancy and the average person can look forward to a reasonable period of retirement. It is very important that those retirement years are years of fulfilment and financial security rather than years of penury and hardship. This Bill will go a long way to ensuring that this is so. It will go a long way to ensuring that people who contributed throughout their lifetime will not find the cupboard is bare.

The Minister mentioned tax relief on contributions, and this is a major incentive for people to contribute to pension schemes. It might be opportune also to look at the question of tax relief to people on pensions, particularly non-contributory pensions, to ensure that the same rules apply to them as apply to people on ordinary social welfare. I know it is not directly related to the Bill but this point might be looked at in the future.

I have come across cases where people have contributed to pension schemes and as a consequence are getting small occupational pensions because they have not enough contributions to get contributory old age pensions. In these circumstances some relief or some recognition should be given. The occupational pension in such cases should not be fully assessed as part of a means test against non-contributory old age pension in view of the fact that the source of the occupational pension was contributions from the contributor or the pensioner himself or herself.

The Minister said that the total amount invested in pension schemes is in the region of £10 billion. It is very important that this vast amount of money is given adequate outlets within the Irish economy. For that reason we must ensure the continued growth of this economy so that there will be ways where prudent investment opportunities are available. With the opening of the frontiers it will become more important that we hold on to the moneys being contributed in pension schemes annually and that we invest them safely and profitably within our own economy.

The Bill is very comprehensive and the Minister has dealt with it in great detail in his speech. I would like to stress a few points. First, we live in a world where to move from one employment to another over a period of one's working life is the norm, not the exception. This itself is a good thing. Meeting new challenges during one's working life is very important. Any obstacle that would hinder employees from considering such a move should be removed. Therefore, I consider the preservation of benefits to be one of the most important provisions of this Bill. No longer will one have to consider serious financial loss or possible financial loss due to the fact that one changes employment. I know from experience that this has been a major deterrent to people changing employment even within the State sector. That was a great pity. In line with this thinking perhaps the question of redundancy payments and entitlements and the preservation of these entitlements when changing from one employment to the other can now be tackled and any barrier to changing employment, making progress, development of the person and opportunity, will be removed.

A second very important point in this Bill is the question of funding and standards and the requirement of actuarial funding certificates. Independent assessment of the value of funds is very important. Accounting in the traditional manner would serve no purpose for the pension scheme. The obvious question that arises is whether the pension scheme will be capable of meeting future demands. It has been found, particularly after liquidations, that people did not receive benefit in line with what they had been promised; in fact the funds were not there to honour those promises. On this point the whole question of annual reports and disclosure is very important.

Disclosure of information is dealt with very comprehensively both in the Bill and the Minister's speech. However, sometimes so much information can be disclosed that people cannot see the wood for the trees. It is very important that the information given in the regulations and so on is in such a form as to be intelligible to the ordinary person. In this regard the actuarial funding certificates play a very particular role. It is important too that through trade unions, etc. not only is the information disclosed but the people to whom it is disclosed and to whom the reports are made are examined. Everything possible must be done to ensure that the information is checked and the process is not seen as just another ritual. Some thought should be given to issuing a simple, clear statement which would state that the pension fund is capable of fulfilling its requirements. Such a statement should be given at regular periods to every member of the pension scheme.

Trustees are also dealt with in this Bill. The duty of trustees, as the Minister pointed out, was mainly dealt with under a 19th century Act. The Minister outlined in section 59 of the Bill the main duties of the trustees as follows:

(a) to ensure, in so far as is reasonable, that the contributions payable by the employer and the members of the scheme, where appropriate, are received;

(b) to provide for the proper investment of the resources of the scheme in accordance with the rules of the scheme;

(c) where appropriate, to make arrangements for the payment of the benefits as provided for under the rules of the scheme as they become due;

(d) to ensure that proper membership and financial records are kept.

In a nutshell the Bill provides clear direction as to the trustees' responsibilities. The Bill also provides effective redress in the case of non-compliance. It is no good making rules and regulations if the ways of ensuring compliance are not adequate. I hope that the provisions relating to compliance will never have to be enforced, but they are an important safety valve so that people can have faith in the schemes in which they are investing and so as to ensure that never again will we have some of the problems that occurred in the past.

This legislation is a milestone in providing for a happy and prosperous retirement for many people. Last year we introduced PRSI for the self-employed. This gave an opportunity to many people for the first time to ensure that in their old age they would not be subject to means-tested social welfare. That was a major step in the right direction. For a small contribution the indignity of means testing no longer exists for many pensioners. This Bill, which deals basically with occupational pensions, is another milestone in the same direction. It ensures the safety of pension funds for vast numbers of people so that when they reach retirement age the fruits of their labours will be available to them.

Creidim go bhfuil an-mholadh go deo ag dul don Aire as an obair atá á déanamh aige maidir le cúrsaí leasa shóisialaigh. Mar a dúirt mé ag an tús, b'fhéidir nach minic go mbíonn na ceannteideal sna nuachtáin, ar an raidió, ar an teilifís, tugtha dona leithéid seo. B'fhéidir, mar go bhfuil an iomarca sonraí i gceist ann, agus b'fhéidir, chomh maith, mar go bhfuil chuile dhuine aontaithe, go mba cheart na rudaí seo a dhéanamh. Ach is minic go mba cheart rud a dhéanamh agus fós nach ndéantar é. Tá an tAire tar éis tabhairt faoi na rudaí seo a chur i gcrích. Chuaigh sé i gcomhairle leis na daoine difriúla a bhíonn ag plé leis na hábhair seo agus tá sé tar éis Bille iomlán cuimsitheach a chur faoinár mbráid.

Ní hé seo an chéad Bhille aige agus, ar ndóigh, beimíd ag súil le Bille eile uaidh amach anseo a chuirfidh tuilleadh feabhais ar chúrsaí do mhuintir na tíre agus go mórmhór don dream sin atá ag brath ar chúnamh ón Roinn Leasa Shóisialaigh. Creidim nuair a dhéantar scrúdú ar an obair atá déanta ag an Aire go bhfeicfear go bhfuil sé tar éis breathnú i ndiaidh an dream is mó go mbíonn breathnú ina ndiaidh ag teastáil uathu; go bhfuil sé déanta aige go ciúin is go staidéartha, go bhfuil cosaint déanta aige orthu agus go mb'fhéidir nach bhfuil dóthain creidiúna faighte aige as an obair sin. Ní minic a chloiseann tú daoine ag caint nó ag gleo faoi na mionrudaí a dhéanfas difríocht do sheandaoine, ach, faoi dheireadh, creidim go mbeidh buíochas phinsinéirí na hEireann ag dul don Rialtas agus don Aire as obair an lae inniú.

I agree with Senator Ó Cuív. The Bill is well motivated and desirable. This is serious reforming legislation in the area of occupational pensions. It is something that workers have been pressing for down through the years. Workers saw the need for legislation to regulate occupational pensions. Many workers saw their rights to benefits being eroded down through the years. We are all aware of highly publicised cases relating to insolvent pension schemes, due to mismanagement and maladministration of some of the pension funds.

I compliment the Minister on introducing this Bill. Senator Ó Cuív is as enthusiastric about it as I. I do not suggest that there are many flaws in the Bill, but it is not 100 per cent right. My observations are an effort to strengthen the legislation. The abuses which took place, although not many, created unease among workers especially those threatened with redundancy or job closures. Years ago people argued with workers that the trustees Acts were there to protect pensions. This however was not the experience of workers, who did not realise that the Acts were not appropriate to deal with pension funds. They are not the appropriate instruments to deal with occupational pension schemes for two reasons. First, they were enacted prior to the development of pension schemes with the result they are unsuitable to deal with the complexities of occupational pension schemes. Second, they are unable to give adequate protection to members of schemes. Very onerous duties were placed on trustees at that time. Indeed, many of them did not understand what their functions were. As I said, these difficulties were being encountered before occupational pension schemes became widespread.

The Minister mentioned that the assets of the pension industry amount to £10 billion. It is my understanding the figure is nearer £6 billion but whether it is £6 billion or £10 billion, the pensions industry is a key sector of the economy. For this reason, we must take a very serious look at the Bill and view it as an attempt to safeguard the rights of members of pension schemes and an endeavour to ensure that their pensions are guaranteed. Having said that, it is necessary also to highlight workers' concerns. They would like to see greater trade union representation on the board. I do not know the Minister's views on this matter but it seems the membership of the board will be such that the employers' representation will be disproportionate. As occupational pension schemes form part of an employee's working conditions, they are subject to negotiation between the trade union and employer and, therefore, it should follow, given that they have the same interests, there should be equal representation.

Given the need for deterrents and the serious problems which arose for scheme members who became the victims when trustees failed to fulfil their duties, we have to consider whether the fines stipulated are satisfactory. It has been said in relation to section 3 (2) that the fine should be in the region of £1,000, and in relation to section 18, it should be between £10,000 and £15,000. I cannot say that I agree with those figures but I certainly think the fines should be higher than the amounts proposed. Perhaps, the latter figure of £15,000 in relation to section 18 is a bit hefty but the minimum fine should be higher than the figure mentioned by the Minister.

The purpose of the preservation and revaluation proposals is to substantially improve the current position for the majority of scheme members, particularly those who leave the scheme before reaching normal pensionable age. If this provision was not included, the only option open to the people who take early retirement would be to take a refund of contributions. Indeed, those entitled to non-contributory pensions would have no rights at all. While the Minister's proposals will not solve all the problems they will lead to a vast improvement so far as the trade union movement and the ordinary worker on the shop floor are concerned.

We have one difficulty however with the provisions of the Bill and it relates to preservation and revaluation which will only apply following a much longer lead-in period than the one recommended by the board. This would appear to be a rather cautious approach. Indeed, the representatives of the pensions industry on the board were, in fact, satisfied that they could be implemented over a shorter period. Therefore, I suggest that the lead-in periods should be reconsidered. In relation to benefits arising from service prior to the commencement date of the legislation, it may not be realistic to extend the preservation and revaluation provisions to them at this stage. However, given the importance of this issue, we feel the matter should be kept under constant review and that a provision dealing with this issue should be included in the Bill to be applied after a number of years.

Section 37, which states the board shall determine any questions concerning benefits, does not seem to contain any reference to the procedures to be followed by the board when dealing with applications under the section. Will the Minister look at this matter to see if the section can be amended to allow the Minister publish regulations setting down the procedures to be followed by the board when dealing with applications under this section?

Section 10 outlines the functions of the pensions board, one of which is that they shall issue guidelines on the duties and responsibilities of the trustees of schemes. This is welcome and I see it as one of their more important functions. However, we seek some clarification on some provisions. It seems they are a bit more vague than the Minister may have intended. For this reason, when replying, the Minister might indicate whether section 10 will be redrafted with attention being paid to the provisions in other legislation dealing with the question of codes of practice.

Under the Bill, schemes will be required to preserve the benefits of scheme members who leave employment after the commencement date of the legislation but before reaching normal pensionable age and who meet certain qualifying conditions. These preserved benefits only relate to service or contributions after the commencement date, "the appointed day", of the legislation which is likely to be January 1991. As an alternative to preservation, employees will be given the choice of either a transfer payment, equivalent to the actuarial value of their preserved benefit entitlement made to the scheme of their new employer or an approved annuity band underwritten by a life office.

The proposals on preservation have to be welcomed, as they will improve the current position for the majority of scheme members who leave before reaching pensionable age. However, one or two difficulties have to be resolved. For example, very few schemes currently make provision for revaluation. The only real option open to the majority of members leaving early is, as I said earlier on, to behave in that way. Perhaps, the Minister would reconsider the provisions dealing with the right of refund of contributions to see if they could be made clearer.

On the question of minimum funding, ample funds are being provided in the sense of meeting liabilities in the event of a scheme being wound up. While we welcome these provisions we have to ensure that pension promises will be properly funded and where these promises cannot be met, the funding situation should be addressed or the benefits reduced.

The main issue of concern to us in this Part of the Bill is contained in section 46 which deals with self-investment. This section provides that actuaries must exclude from their calculations any investments in excess of a prescribed percentage — the specific percentage is not prescribed in the Bill — within a prescribed class or description of investments. In view of the importance of this section and the controversies which have emerged in relation to certain pension funds being used in this way by many employers, we feel this section could be amended to make it illegal for schemes to self-invest more than 20 per cent of their assets or, as recommended by the Pensions Board, provided that any such investments in excess of 20 per cent of the total value of the scheme's net assets should be disregarded for the purposes of actuarial certification.

The provisions in the Bill dealing with the disclosure of information are welcome. The Bill provides for the disclosure of a range of information to scheme members, prospective members, beneficiaries and authorised trade unions concerning the administration and financial soundness of the scheme. Annual reports, annual audited accounts and actuarial valuations will be compulsory. It seems unsatisfactory that a Bill which is supposed to improve the flow of information to scheme members and their representatives fails to spell out more precisely the information to be provided and frequency of provision of such information. We are particularly concerned about the limitations in section 53 restricting information to "on request" and the right of the Minister under section 56 to restrict the rights to information. There is also a need to provide for other regulations to spell out the details of annual accounts, the actuarial valuation and the frequency of such valuation.

In this respect and having regard to those observations, we feel that the Bill could be amended to set out more specific disclosure requirements in relation to trustees' reports and the annual audited accounts. The more detailed requirements and requirements relating to format and presentation should be dealt with in the regulations envisaged under the provisions of section 53. We suggest that under provisions of section 53 the trustees' report should contain the following information: total income including employer contributions, employee contributions, if any, and investment income; membership breakdown giving number of members by age category, the service spread of members, changes during the year and deferred benefits to members; total outgoings including pensions payable in full, pensions payable to spouses and other dependants, commutations and transfers, death in service benefits and tax.

The qualifying service requirements under the Bill seem to be less favourable to people over 25 than those recommended by the National Pensions Board which suggested five years qualifying service in the case of members under the age of 25, reduced by one year for each year over 25 subject to a minimum of two years qualifying service. We would favour the formula put forward by the National Pensions Board.

Section 34 of the Bill enables the trustees of the scheme to effect, in certain circumstances, a transfer payment without the consent of the member. We see this as an extremely unusual proposal. Therefore, some indication should be given in this section as to the circumstances which would warrant such action by the trustees.

The revaluation proposals contained in the Bill are less favourable than those put forward by the National Pensions Board. They recommended that preserved benefits should be revalued by the full amount of the consumer price index up to 4 per cent. Where the consumer price index exceeded 4 per cent but was less than 10 per cent, an increase of half the excess of 4 per cent should be given, which allowed for a maximum increase of 7 per cent. We favour this formula which provides for a much more realistic revaluation and it makes compulsory preservation much more acceptable to scheme members.

In his Second Stage speech the Minister talked about implementing the requirements of EC Directive 86/378 that occupational benefit schemes comply with the principle of equal treatment for men and women. It provides that there cannot be discrimination, either direct or indirect, in the scope of and conditions of access to schemes, benefits, rights and contribution levels. What it does not provide for is what worries us. The Bill does not provide for the full implementation of the recommendations contained in the Fourth Report of the National Pensions Board. Instead it avails of the many exemptions allowed under the EC directive. Accordingly, there is no provision for equal treatment in relation to retirement ages and survivor's benefits. The Bill does not address the effects of past discrimination as the equal treatment provisions will only apply to benefits arising after implementation of the equal treatment provisions.

The Fourth Report of the National Pensions Board, which was accepted by all interests represented on the board, provided for the elimination of most forms of discrimination in the occupational pensions area. The recommendations of the board went beyond the minimum requirements of EC Directive 86/378 in anticipation of future developments at EC level in this area. It was accepted that the pensions industry should introduce the necessary changes now rather than wait until they were imposed through EC legislation.

Furthermore, there is considerable uncertainty about the scope of Article 119 of the Treaty of Rome and its application to occupational pensions. Given the most recent ruling of the Court of Justice on this question — Barber v. Guardian Royal Exchange — which confirms that pensions benefits are deferred pay and therefore came within the scope of Article 119, the provisions in the Pensions Bill will not ensure the full application of this. The European Court of Justice also concluded that women and men should receive the same pension from the same age. If the Bill is not amended in order to address these issues it will lead to the cumbersome and unnecessary process of referring cases to the European Court in order to seek the enforcement of members' rights which would be an utter waste of public resources. It is our belief that the Minister can do something in that respect. We suggest that this Part of the Bill be amended to provide equal treatment with regard to retirement age and survivors' benefits. We also contend that the exemption on actuarial grounds is unnecessary and, given that it must be abolished by 1999, it would be more appropriate that it be dealt with under the provisions of this Bill.

I will omit some of the comments I had intended making because the Minister's introductory remarks were very comprehensive. I do not regard this as a very controversial Bill; in fact, I contend it should be welcomed by all sides of the House. Nonetheless it is my hope that the Minister will reply to our observations. I have no doubt we shall have to table some amendments and it is our hope that the Minister will see his way to effecting some amendments thereby reflecting some of our observations and criticisms.

The failure of the provisions of this Bill to provide for the participation of members in the appointment of trustees of pension schemes casts serious doubts over its stated purpose, that being to effect major reform in this area. To exclude members from this limited form of participation in the management of their pension funds runs counter to the overall thrust of the Bill. Limited though it may be, experience to date demonstrates that where member trusteeship exists it has proved to be positive and constructive, enhancing the confidence of members in their pension schemes and leading to a greater level of interest on the part of members in their schemes. The National Pensions Board recommendation on this issue was made after lengthy consideration of all the arguments, including those advanced by employers. Their final recommendation was a compromise which took account of the reservations and concerns expressed by them, which is reflected in the very restrictive nature of their recommendation.

Employers' opposition to member trustees does not withstand scrutiny. Neither are their arguments supported by experience to date. As I have said already, where member trusteeship exists the experience has been a very positive one, supported by some employers such as the Construction Industry Federation represented on the National Pensions Board. All the representatives of the pensions industry supported that view based on their experience. Therefore, it would appear that employers' opposition to member trustees is not well founded.

I will draw an analogy, although some people might contend that I am not comparing like with like: if one is undertaking the extension of democracy to all levels of industry, executive, minor boards and so on, then one must seriously consider the overall question of government within industry because the only people governing at present are the employers themselves. There is now greater worker participation which will inevitably reach a point at which workers participate at every level, resulting in unions being able to contend that workers are involved in the governing of their industries, which would be an eminently desirable development. I contend that member trustees, who have already proved their capabilities in many areas and at various levels should be afforded an opportunity of greater participation. In that respect I contend the Minister should stand up to employers.

While some people might question any criticism of the Bill I pre-empted my remarks by saying that just because one may regard a Bill as being a good one overall, that does not mean one cannot question any of its provisions. Nonetheless some changes are warranted. It is our hope that the Minister can meet us at least in part.

I welcome this comprehensive Bill and will make just a few remarks on it. I compliment Senator Harte on his excellent contribution. He was honest, he complimented the Minister and said there were just a few issues with which he was unhappy, which must be encouraging for the Minister.

The Bill incorporates the First and Fourth Reports of the National Pensions Board established in 1986 to review the operation and regulation of occupational pension schemes. The first report provided a series of recommendations reflected in this Bill. Their fourth report dealt with equal treatment of men and women in occupational pension schemes, the subject of EC Directive 86/378.

I congratulate the Minister on having introduced this Bill which has been long overdue. Its introduction illustrates further the provision of comprehensive pension entitlement for many people at work in this country. It is a major Bill with significant provisions providing for the direct control and regulation of occupational pension schemes and the protection of members interests through the implementation of standards in the case of all such schemes. The explanatory memorandum sets out the main provisions of the Bill in a clear, concise manner.

One important aspect of this Bill is that it will provide much-needed protection for members of pension schemes who were unsure of their entitlements to date. In addition, its provisions will allow for equal treatment of men and women and they lay down standards and rates of contributions for such schemes which is essential.

A recent study undertaken of the 12 EC member nations showed that Ireland was not to the forefront in the provision of pensions. In fact, it showed that Irish pensioners were worse off than any of their counterparts in other EC member states in terms of what their pension could buy and, more importantly, in terms of value for money. That study also drew attention to the fact that, on retirement, the drop in Irish pensioners incomes was the worst in the EC with the exception of the United Kingdom. One might well contrast that with the position obtaining in the Netherlands where, on retirement, an employee can expect his or her pension to represent in excess of 90 per cent of their previous income. In any comparison with the position obtaining here in regard to most pensioners, it will clearly be seen that Dutch pensioners are twice as well off as ours.

The Minister has decided to establish a pensions board to monitor and supervise pension schemes here. I welcome the fact that that board membership will comprise a wide spectrum of representation from Government, trade unions, employers, the self-employed and professionals within pension schemes, thereby catering for a wide range of interests. Their remit is wide in that they will be responsible for ensuring that the provisions of the Bill are properly implemented. In addition, they will have exceptional powers to carry out inspections of various occupational pension schemes.

Sitting suspended at 6 p.m. and resumed at 7 p.m.

Prior to the break I had made reference to the fact that the remit of the board was wide. They will have responsibility for ensuring that the provisions of the Bill are implemented. They will have exceptional powers to carry out inspections of the various occupational pension schemes.

It is also noted that failure to comply with the requirements of the Bill will be an offence and penalties will be enforced. I have already referred to the EC Directive 86/378. It is most important. I understand there are 500,000 people of pensionable age in Ireland, and the number is increasing annually. One of the biggest problems for many of these pensioners is loneliness and isolation and, in many cases, trying to exist on very small pensions. However, in the last few years the present Minister has shown himself to be a caring Minister with special compassion for and interest in the weaker sections of our community. I would hope to see him continue his excellent work in this respect.

Section 10 sets out the precise functions of the board which shall be to monitor and supervise the operation of the Act and pension development generally, to provide the Minister, at his request, on his own initiative, information on all matters relating to the functions assigned to the board by this Act and on matters relating to pensions generally, to ensure guidelines on the duties and responsibilities of trustees of codes of practice and specific aspects of their responsibilities and, further, to encourage the provision of appropriate training facilities for trustees of the schemes.

Would the Minister consider setting up an advisory and public information office? I believe 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 of problems which might arise for the ordinary member. It is possible that the Minister intends to provide this type of service.

Part III of the Bill concerns the preservation of benefits. I was indeed surprised at the Minister's recent statement to the effect that 90 per cent of workers who change jobs cash in their pension contributions. While some may reinvest the money in insurance policies or in 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 long-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 are not over-concerned with those leaving the scheme which creates problems for those concerned in securing 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 2nd Schedule, seeks to address. I welcome the provisions in this section.

I would like also to refer to section 53 which provides that the trustees of the scheme shall prepare an annual report containing information relating to such matters as may be prescribed with the consent of the Minister for Finance concerning the operation of the scheme during whichever periods the trustees may select.

Section 56 points out that trustees of the scheme shall cause the accounts of the scheme in respect of such periods as may be prescribed to be audited by the auditor of the scheme and should cause resources and liabilities of the scheme to be valued. Will this be actually referred to the Comptroller and Auditor General? I believe it should, if at all possible, and it would certainly lend a lot of prestige to the auditor's report.

The setting up of the Pensions Board to monitor and supervise on a regular basis the activities of pension schemes is a very important development. In the past we have seen the scandal where employers were supposed to be making PAYE and PRSI returns on a monthly basis on behalf of their employees, but when something went wrong and these employees tried to claim the benefits they were entitled to they found, to their amazement, that these returns had not been made to the Revenue Commissioners. Indeed, we have seen where some pension schemes were underfunded in some areas. In all these cases, the employee was at the mercy of his employer. Thankfully the provisions in this Bill change that. The duties of the trustees of these schemes are clearly outlined. I welcome in particular, the section in relating to disclosure of information in relation to the scheme.

In the past members had no way of confirming the position of the funding of various schemes. They had no idea how they were administered and how they were performing and, most important of all, they did not know what payments they would receive on a regular basis when they retired. They did not know if the payment was index-linked or was at a flat rate, in which case it would lose its value. Under this Bill the trustees must provide members with certain financial and other information about the scheme. Full disclosure must be made of the individual rights and obligations which arise under the scheme. Also, according to the Bill, if a member is unhappy with the way the scheme is operating, he can have recourse to the pensions board to have the matter investigated.

I believe this Bill will create confidence among the workforce. It will help many employees to plan for retirement and, in so doing, help them to maintain the standard of living they were accustomed to. Hopefully, it will encourage early retirement, which will create further employment. I would like to make the point to the Minister here that I believe there is no provision for transfer of pensions within the public service. This is unfair to many sections, especially those involved in the public service. I would ask the Minister to find some way whereby these pension schemes could be transferred from one employment to another within the public service.

Finally, I wish the Bill every success and hope its scope will be broadened over the years to include those in non-pensionable employment at this point. I commend the Bill to the House.

Like the other Senators, I welcome this Bill as a very positive step towards the provision of a comprehensive pension entitlement for all workers. It has quality and it also has quantity, if one looks at the 80 sections and the 46 pages of the Minister's presentation to us this afternoon. He has shown a great understanding of something that is very complex. He has looked at the minutiae and the nitty gritty of pensions.

The Bill, as other Senators have said, proposes to establish a National Pensions Board which will monitor and regulate the pensions industry and ensure that the provisions of the Bill are complied with. The areas covered, as we have heard over and over again, are the preservation of benefits, minimum funding standards, disclosure of information in relation to schemes, reference to the trustees of the schemes and their functions and, what is very important to me, equal treatment of men and women in occupational pensions schemes. I am not very clear on the specific date the Minister might have in mind for full compliance with the EC directive on equal treatment, but I will come back to this point again.

One omission in the framework of occupational pensions schemes which has been mentioned by others is that the self-employed and those in non-pensionable employment have been left behind. There have been considerable requests to Senators to emphasise this point. Farmers, again, are omitted.

Returning to the area of equal treatment for men and women in pensions schemes, I wonder about the feasibility of having the trustees manage schemes in view of the confusion with EC Directives. As a lay person looking at the Pensions Bill I am confused as to whether the Directives are coming onstream in 1993 or 1999, whether it is left to the discretion of member states, particularly us, to do what we like at particular times or whether we are actually under legislative Directive from the EC to comply immediately. I wonder whether pensions as a form of remuneration are covered by the Anti-Discrimination (Pay) Act, and are covered under existing Irish legislation where obviously unequal treatment is illegal.

Reference has been made in the other House — and it has been made by Senators here today — to the excellent work carried out by the Pensions Board. It is interesting that it is almost 100 years since the Trustee Act of 1893 was introduced, indeed we had major alterations to it in the Perpetual Funds (Registration) Act, 1933. Again, because of the excellent work done by the Pensions Board I think the Minister perhaps should have heeded all their recommendations. As I said, I am still not clear as to whether we have fully adopted the principle of equal treatment in pensions schemes. He has provided for equal treatment in the areas of access and benefit, but has he provided for it in the areas of survivor benefit? From the contributions I have heard here this afternoon I was under the impression he had but in the course of his speech, the Minister said:

In line with the timescale laid down in the Directive, schemes will have up to 1 January 1993 to comply in full with the equal treatment provisions in the Bill. Discrimination in contracts of employment and collective agreements must also be removed by that date. Full equal treatment will also be required by 1 January 1993 in the case of employees' contributions, where the rates differ by reference to the use of different actuarial factors for men and women. The Directive permits the deadline to be extended in the case of such differences in treatment up to 30 July 1999....

The Minister says he has decided not to avail of this exemption and I compliment and applaud him for that. The point I am worried about is where he states:

The Directive also permits member states to defer the compulsory application of the principle of equal treatment for pensionable age and survivors' benefits, at the latest until a further Directive requires equality in this area. The EC Commission submitted proposals for a further such Directive in October 1987.

The Minister says: "It was my intention"— the past tense is used and I am not very clear on it —"originally to wait until that Directive was adopted....". Is the Minister saying it is now his intention not to wait and to comply with the Directive? It is my understanding he has decided to comply with it as regards the Barber case.

The Senator will see in the next paragraph, when I refer to the Barber case.

The Minister says:

I concluded that to permit differences in the treatment of men and women under occupational schemes in this area in accordance with the terms of the Directive would be ultra vires Article 119 of the Treaty of Rome. Accordingly, equal treatment in relation to retirement age is now required under the terms of the Bill.

My understanding of that is that it is in the Minister's power and in the Bill to give that equal treatment. Is that from this moment, or at the specific time when it will be tested?

In relation to the Employment Equality Agency, I am glad the Minister took many of their amendments on board and incorporated them in the Bill before us. There was just one aspect which he did not accept and maybe he may accept that the justification test will now apply irrespective of the sex of the person, but the Employment Equality Agency feel he did not go far enough and include that the justification test should constitute an essential requirement. They — and I would agree with them — refer back to the 1977 Employment Equality Act, which I would accept is an excellent Act, and it uses the words, fortunately for us, "essential requirement". I hope the Minister will take the lead from that Act to include the expression or term "essential requirements".

I applaud the Minister for having accepted the equality aspect. However, originally Oireachtas Members' pensions from what I can gather, only covered survivor's benefits for men and that perhaps on 1979 or 1980 — I am not 100 per cent sure of the date — it was amended to cover women. It is interesting that the lead was shown in the Oireachtas as regards updating the measure. As I said, I am glad the Minister has taken this on board, it would have been degrading for any woman in employment and paying into a pension scheme to realise that because of her sex, her widower and her children would not benefit from her pension. I would like to have that spelled out because I am still not very clear.

Outside political life, as a teacher paying into a pension fund I sympathise with my colleagues and women in employment in general, paying into pensions if they find they are unable to pass on their entitlements to their widower or children. Because of demographic trends throughout Europe women will be increasingly sought after in employment, but unfortunately for many it will be in part-time employment. Eventually, I suppose, all member nations will have to respond to the voice of women in deciding what they want and to the implementation of Directives from Europe on equality.

At the end of the day, the success of this Bill like all Bills, will depend on the enforcement of regulations and regardless of what Bill one is speaking on that will mean funding. When one thinks of the enormity of the task before the Pensions Board monitoring, the 25,000 different schemes which will be registered with them, I worry about the number of staff necessary to assess those schemes individually. Apart from the time-consuming nature of the job, I am talking more of the actual remuneration, the cost, the resources, the funding, etc. that will have to be found to ensure that what I consider an excellent Bill will be implemented successfully. We pass worthwhile legislation but I often wonder about the follow-up and whether the provisions are enforced. Staff will have to be employed to undertake the many tasks, including the supply of actuarial certificates to enable the members to ascertain whether individual schemes satisfy the new funding standards. The monitoring of the operation of these standards will also necessitate more staff.

I want to refer to the position of the trustees. I am not very clear who the trustees will be but obviously they will need to be properly briefed because of the complexity of the Bill. Enormous amounts of information will be available to the trustees and the success of the Bill will depend on them. I referred earlier to the enormous task they will have to undertake in policing the large number of schemes registered with the National Pensions Board. The Minister should be pleased by the remarks of the Senators in relation to his handling of this complex Bill. Obviously he has mastered his brief. I hope that financial circumstances will not thwart his endeavours to implement the provisions of this major legislation.

This Bill relates to everybody. Regardless of whether one is male or female, at some stage we will all be dependent on a pension. People can no longer rely on the extended family to ensure a nice retirement into old age. We will have to depend on the hard nuts and bolts of whether there is money in the kitty for our requirements which will become greater in certain areas as we get older, and we will still have to eat and drink and have shelter. I am concerned about the financial aspect of these schemes. We need to ensure that the regulations are adhered to. We are all aware of the havoc that was caused over the past five years by the collapse of some pension schemes. The unfortunate people who had paid into those schemes did not have a clue what happened to their money. Obviously, this pinpointed the inadequacies in the system and led to the introduction of this Bill. However, as has been said, the majority of pension schemes are operated successfully.

I am not too sure what will happen if one scheme slips through the net in the future. Under section 80 a fine of up to £10,000 or imprisonment can be imposed on an employer who is found guilty of an offence. However, if a large company slips through the net I am not sure who will meet the pension payments if those people who have paid into schemes during their working lives. Who will pick up the tab at the end of the day in those circumstances? Will it be the Oireachtas or the trustees or will money be set aside for such cases? We must ensure that the Bill provides for such an eventuality and that there is sufficient protection for all members of the public, male and female, who have paid into a pension fund which they believe will secure their old age.

This Bill has been comprehensively drafted. I am glad the Minister accepted some amendments when it was being discussed in the Dáil. I should like to hear his comments on the funding of these schemes and the person who will have to pick up the tab at the end of the day if a company slips through the net. I compliment the Minister on the Bill.

I too welcome the Minister to the House and compliment him on this very fine Bill which deals with occupational pension schemes, which needed to be dealt with for a number of years. The Labour Party are glad these areas have been identified and addressed by the Minister. The Bill does not deal with certain areas the Labour Party believe need to be dealt with, and I will refer to these later. Nevertheless, it is historic legislation which is very necessary.

As the Minister said, there are up to 25,000 occupational pension schemes and obviously some degree of rationalisation is required. The Bill will regulate those schemes and put them on a firmer basis so that they can be monitored and properly funded and operated. Up to 550,000 people are involved in such schemes which have assets of £10 billion. We are talking about a large number of people, a large amount of money and a large number of schemes and it is only right and proper that there should be comprehensive supervision and regulation of such schemes.

The general objective of the Bill is to provide preservation of benefit and or the transfer of such benefit when someone changes from one employment to another. This is the most innovative characteristic of this Bill and will be a positive element in extending the benefits of pension schemes. Many people who changed jobs could not transfer their benefits and had to withdraw their money, which is the normal procedure. Up to 90 per cent of these people settled for a refund of the pension benefit they had already accumulated and this meant their entitlements were dissipated very quickly. As a result many of them found they had no entitlements when they reached retirement age and ended their lives in poverty and loneliness.

It is absolutely essential that the minimum funding standards be put on a regulatory basis and supervised. This will ensure that proper funding is being maintained and people will not be left high and dry if employers are not contributing as they should be. Accountability is absolutely essential. Of course, the disclosure of information is part and parcel of accountability. Members need to be aware of what is happening, how their money is being invested, the returns on their investments, how the scheme is being operated and the procedures involved.

I welcome the provisions dealing with penalties which can be imposed on trustees who are not doing their job. These people should be either removed from office or penalised. All these provisions are necessary to tighten up the legislation.

I want to refer to the equality of treatment for men and women arising out of EC directives. I welcome this desirable updating of the legislation. It is a pity that so often we have to wait for EC directives before we update our legislation and provide statutory protection and entitlements for women. I am glad the Minister has gone further in this Bill and is not going to wait for any further exemptions which may have to be taken on board in regard to the timescale for the operation of pension schemes for men and women.

The establishment of a new statutory pensions board is another necessary element to monitor the operation of the schemes and to ensure that the best advice is given. The schemes should be compared with those in other countries thereby ensuring that we have a streamlined operational system in relation to the occupational pension schemes.

The last items of importance are the appointment of trustees and the participation of members whose contributions largely make up these schemes, their participation in the appointment of trustees and the necessity to have representation from members who make up the major part of the assets in all the occupational pension funds. I would like to see us going further down that road.

There are areas the Bill could have covered to a greater degree. For example, it does not include farmers or the self-employed, even though the Minister has extended PRSI and while there has been movement in providing some levels of pension to the self-employed we still have a long way to go. It is an area that has been omitted in the context of an adequate pension and the elderly who are already living on inadequate pensions will not benefit from this either. The fact that not all employers are bound to establish an occupational pension scheme for their members is a serious matter. At this point we really need to look at the whole area of pensions.

Everybody expects to reach a stage where they will retire, where they will not be working and we should seriously look at the idea of a comprehensive pension scheme in the context of a national scheme that would make it obligatory for employers to ensure that employees are involved in such a scheme. This refers only to the rights of people in future and does very little for them at present. It makes some concession to people who are involved at present but very little for those who have worked in the past and for those who will be retiring in the near future.

Another area about which I am concerned is that of the part-time worker, where employment is expanding. There are inadequate provisions in the context of trade union and employment rights. Job-sharing, part-time and temporary work are becoming increasingly part of our society and they are areas requiring comprehensive legislation. I would like to deal with that later.

The Minister should address the whole question of the retirement age. We have not had a reduction in the age of retirement since the seventies when Frank Cluskey reduced the age at which one could draw the old age pension from 70 to 66 years of age. It would be nice to see some commitment given to a gradual reduction of that maximum level. It is time we thought about a maximum of 65 and reducing it progressively to 60 years of age. Sections of society in certain areas of employment — the Garda and firemen — can retire at 55 years of age. Primary teachers, for example, can retire after 35 years' service, whereas in my sphere — if I may be parochial — secondary teachers cannot retire until they have completed 40 years' service. There are certain areas of employment, particularly in the public service and the Civil Service, having varying ages at which people can retire.

I have always considered a pension a deferred salary. While working a person pays a percentage of his earnings, year in, year out, towards his retirement. The money might be there for 20, 30 or 40 years, it might be invested but it is there for that person's benefit. From that point of view, as it is really a deferred salary to be used for retirement purposes, the earlier one can get one's hands on it the better as none of us knows the hour we may be called.

There are now greater levels of stress in society than heretofore. In my own opinion, we are engaged in a permanent health insurance scheme which supplements the teachers' superannuation scheme. The reason is that so many of our members were going out on retirement on disability between the ages of 50 and 65. They are very stressful years in the teaching profession when a new generation of students comes along thus increasing pressure in relation to class sizes, jobs, exams, demands of third level, demands by parents and pupils. The inevitable consequence is the need for extra health cover.

In middle age people are prone to disability and to stress-related illnesses, heart condition, depression, nerves and so on. They have taken a tremendous toll of our members in the trade union movement and in the classroom in recent years. We are not able to address that problem because of the fact that we have a very limited conciliation and arbitration scheme. Even though we take the matter to conciliation, we cannot process it any further as we cannot get it through arbitration. The fact that 40 years' service is obligatory for pension rights should be looked at. It is not strictly the Minister's area, it is perhaps more in the area of industrial relations. The whole matter of maximum and minimum pension and the retirement age should be looked at again.

Anomalies in relation to pensions, particularly where one group of teachers can retire at the age of 55 and another group cannot retire until they are more than 60 years of age should be addressed. Obviously they are not getting the benefits from the money they saved and put into pension schemes. There is a difference of five or seven years between the two groups. Perhaps the Minister could come up with some solution because we have been unable to. He might give us some indication in his response as to how he feels regarding the whole area of retirement age and the anomalies that exists between the various categories.

Many elderly people are living on inadequate contributory and non-contributory pensions; indeed up to half a million people in Ireland are in that category. Many people are also living in poor circumstances, as a result of inadequate housing, or are lonely and isolated in public housing. People I know very well in the inner city find it very hard to make ends meet. That great organisation ALONE was set up by Willie Bermingham because of the inadequacy of pension funding to address the needs of elderly people. This is compounded now by a matter I was discussing with the Minister last week, that is trying to set a time limit on getting rid of smog in the city of Dublin where we will in a very short time have to burn smokeless fuel and that will incur extra cost. The fuel allowance is inadequate. It covers only six months and in a climate like ours six months is an extremely short time for a fuel allowance to apply. It should be extended for another two months because at times our autumn and spring weather is very severe. The elderly are going to be hit very much by this and it will be another burden on those who have retired.

Pensions should be linked to the consumer price index and that, unfortunately, is not a feature of most private schemes. For that matter not all schemes in the Civil Service or the public sector are so linked, but they are probably so to a greater degree in that area. The only way of guaranteeing the earning power of a scheme is to have it linked to the consumer price index and that is not covered in this legislation, though there is a move in the context of preservation of benefits towards the benefit being revalued by 4 per cent. That would not do very much in respect of two figure levels of inflation annually as in the eighties though the rate has improved. A consumer price index would be an ideal way of ensuring that the purchasing power of pensions is maintained in the years down the line.

Another feature I would ask the Minister to address is cutbacks that have occurred in recent years in all areas that affect the elderly. Social welfare, health, transport, all these services have been affected by the cutbacks. We have seen a deterioration in the facilities that are available to the elderly and, indeed, to the young, particularly in hospital beds. We do not have what would have been called geriatric hospitals any longer. Long-stay beds have virtually been abolished from hospitals, and many old people simply cannot afford any of these new private institutions that are gradually — or quickly — coming into existence to cater for people for whom the health service is not providing residential facilities at present. Where hospital or day care facilities have been reduced and the £10 out-patient fee has been implemented — we see in today's papers that is to be increased — retired and elderly people will be affected heavily because the means at their disposal are limited. The community care system that was intended to replace the degree of hospitalisation that obtained has not been put in place adequately to ensure that people are catered for.

Transport facilities have been hit badly and continue to be so. Old people have the free travel pass but if the public service is not there they cannot very well avail of it. Now we hear from the Minister for Tourism and Transport that there are to be further reductions in the public transport service. All these back-up services which were available to people who are elderly and have a limited amount of disposable income from their pensions have been cut back in recent years and their situation has worsened.

It is unusual for the private sector pension schemes which this Bill addresses to be indexed-linked. Therefore, so many people in years gone by have seen their pensions ravaged by inflation, the amount coming to them has been declining annually and they have been getting poorer. That has been and still is one of the major problems in relation to occupational pension schemes in the private sector which requires to be addressed. We have a multiplicity of schemes; as the Minister says, there are 25,000 of them: the mind boggles at the number. There certainly is need for some rationalisation in that respect because some are good, some bad and some indifferent. The Minister will be introducing regulations on this, but in terms of maintaining the level of the pension on a standard basis, the only standard by which one can judge is in the context of index-linking to beat inflation. We will have minimum standards which will be very welcome, financial management and supervision to ensure that employees' money is not going amiss or a company do not collapse and the employees find themselves devoid of the pension entitlements they thought they would have.

The new pensions board proposed here will be welcome. I hope they will be used extensively along the lines the Minister has indicated, to examine, to survey, to ensure there is a realistic level of pension in the occupational pension schemes to enable a contributor to retire with dignity when the time comes to do so.

Having looked at all the features in this legislation, I think that eventually we will come to realise that we need a national pension scheme and that it is a Government's function to address that problem. We have a multiplicity of schemes at present with a multiplicity of arrangements, different funding, different investments and different levels of cover. We need a unified plan for all schemes. It should be universal and the legislation should provide that an employee would automatically enter into a scheme and make his or her contributions, and likewise would the employer. Eventually we must look towards that and I would prefer to see it sooner rather than later. I am sure it would involve funding, as does everything else. It requires vision, but it would ensure that all our citizens would be treated with dignity in their old age.

One of the good developments initiated by the Minister is the extension of PRSI to the self-employed. That is excellent and is long overdue. While it now provides funding for the Exchequer, in the future it will ensure that the Government will provide pensions for the self employed, many of whom are at present without pensions and are in great poverty when they retire. The extension of PRSI will be a bolster and a protection against that. Nevertheless, we are a long way from a comprehensive pension plan for all. This is a step in the right direction although still inadequate.

The biggest omission in the Bill is that a pension plan for all has not been considered and there is no commitment to such a plan in the future. The Minister did not refer to such a plan in his speech as something he might take on board in the future or when the finances improve. Perhaps the Minister would refer to the possibility of taking that on board in the context of a national pension scheme some time in the not too distant future.

The Labour Party welcome the establishment of a pensions board. We would like to see greater representation from the Irish Congress of Trade Unions on that board and we will propose that places be reserved for nominations from Congress to ensure good representation for workers. Obviously funding and staffing is essential. All of the legislation coming before the House falls short when it comes to indicating the level of staffing and funding required to implement the proposals. I hope the Minister can confirm that all the essential staffing and funding will be put in place.

The minimum funding standard is a worth-while, necessary provision because of the number of fly-by-night operators in this area. When we are talking about 25,000 schemes there is a number who are not what they pretend to be or what they are stated to be. We have all read or heard of a number of instances in the past where money was not secured, where a company was insolvent, where employees thought their money was going into a pension fund whereas it was not being properly handled at all. The necessity for actuarial certificates for each scheme is obvious. This will ensure that minimum funding standards maintain. That is a fine regulation in the Bill. To do all of that requires staffing. If we are talking about 25,000 schemes we are talking about 25,000 certificates. That has to be done every three and a half years. We are talking about expert staff to check on all of those actuarial certificates and people to follow up employers who do not produce them. They are governed by the law but there are varying degrees of compliance with the regulations. We will have to badger employers, in enforcing the law, ensuring that certificates are provided and checking on the certificates. That is an enormous task. It will require much funding and staffing. I would like the Minister to address that area when replying.

In relation to the disclosure of information the trustees of a scheme will be obliged to disclose to the members the spouses and the unions, the various matters with which they are dealing in the operation of the scheme. They have to account for their stewardship. The provision in relation to the annual report is an excellent provision. An annual report is almost necessary to ensure that a company toes the line and provides members with necessary information. Members as part and parcel of a scheme of this nature are entitled to certain information. Members will get a copy of the audited accounts and they will see how investments are being used. That is a significant development.

The trustees of the occupational pension schemes fulfil an important role. They are concerned with the use and management of the fund. It is important that the trustees be properly selected. My understanding is that that area will be left largely to the board. It should be specified. There is a weakness if the Bill does not specify who the trustees will be. It is important that contributors to the scheme should be substantially represented because accountability eventually is to the people who will be contributing and representatives of the contributors will, more than anybody else, ensure that the company's affairs are dealt with properly. The board of directors of any semi-State body would include one third of its members being representatives of the workers. Likewise in this case a third of the members should represent contributors. It is good for business to ensure that there is a proper representation by people who are anxious about what will happen to the funds. That suggestion is roughly along the lines of the first report of the National Pensions Board.

Equal treatment for men and women is something that has come about because of EC Directives. Eventually, I am sure, elements of it would have been introduced anyway, but it has come about because the EC has required this. It is important that we equalise upwards rather than downwards as the Minister says.

The question of the preservation of benefits and the transfer of pension rights is at the heart of this matter. What we are doing here is extending pension rights to different employments so that somebody who has been in employment will have his pension rights preserved and will have the option of having those pension rights transferred to a future employment. That is really a substantial improvement. It ensures that members who have been working and paying towards a pension will not lose out. It will ensure maximum mobility, that a person can move from job to job without losing pension rights, and it will ensure that the old situation that occurred so often, where somebody who left a job after some years simply got a refund of the money and spent it, being left with inadequate pension rights, cannot happen. The provision which stipulates that the money should not be refunded but rather benefit should be preserved with the member having the option to transfer entitlement is an excellent provision and is at the heart of the Bill.

I am concerned about part-time workers, particularly in the teaching profession, because we have now reached the stage where the birth rate is declining and the pupil-teacher ratio has increased. Indeed, we have the highest pupil-teacher ratio in the EC. Our class sizes at both secondary level and primary level are also the highest in the EC. No new permanent staff are being taken on with the result that during the last three years teachers have found it virtually impossible to find permanent jobs, and are having to accept temporary employment. This is also true of the other professions where the "yellow pack" worker is poorly paid, with few, if any, rights. I would like to see these entitled to pro-rata benefits so that not alone would people working part-time, on a temporary basis or job sharing, be entitled to the benefits given to permanent employees, such as salary, leave, maternity leave, but also to pensions. I would like to see this matter addressed.

I would like to raise the question of the transfer of entitlements between the public and private sectors. I ask the Minister to outline what the position will be. If someone is a member of an occupational pension scheme in the private sector and then moves to the public sector will they be able to transfer entitlement to the public sector and vice versa? This is a matter of some importance, given that people may move to the public sector.

I have reservations about a number of other matters and I would like to see the Bill extended to a number of other areas. I would like to see also the Minister give a commitment to establish a comprehensive national pension scheme in the future. This is a very worthwhile Bill and the Labour Party will support it.

I welcome this opportunity to make a short contribution on the Pensions Bill which is one of the most important Bills to have emerged in recent times, certainly one of the most important to be debated in the House this year. One of the questions we must address is what is the purpose of a pension. We all hope to attain pensionable age or, at least, that dependants of the bread winner, usually a spouse and children, will benefit.

The purpose in introducing this Bill is to ensure schemes are supervised and adequate provision is made. Pension schemes should take into account the rate of inflation and extra costs. We have all come across cases involving widows who once held reasonable jobs but who suddenly found themselves with a fixed pension and, because they did not own their house, having to rent accommodation and meet increasing medical and food costs. As they get older they become partly dependent on a health board or their sons and daughters who have their own commitments to meet. I have come across some very sad cases where it was clear, even though the pension scheme at first sight may have been decent, when inflation and medical costs were taken into account it did not prove to be adequate.

Indeed, people in that position may not be entitled to a medical card. Because they cannot afford to join the VHI they find themselves in extreme difficulty. This question has to be properly looked at. I recall CIE workers, on a pension of £16 a week which was totally inadequate to meet their costs making representations to me. They hoped to get the old age pension on top of that sum.

I would now like to refer to two sets of workers who found themselves in difficult circumstances. The first of these are the former Hospitals Trust workers who certainly were not over-paid. While it was good to see some of the unclaimed prize-money being given to them, given the number of people involved, some of the money raised through the disposal of the property should have been given to them as well. We also had the unhappy saga of Irish Shipping. The workers of this company who had given many years service to it suddenly found themselves out of work. Fortunately some found alternative employment but others, given the nature of the work, found it very difficult to find other employment and soon found themselves in difficulty. It is probable the Minister has received representations on this matter but I ask him to take note of the difficulties both groups of workers found themselves in.

In relation to this Bill, the main thing workers want to know is that their money is being invested in a scheme that is performing well and that when they retire they will receive a pension for themselves and their families. I would like the Minister, when replying, to refer to the case of a person with 15 to 20 years service with a company who for one reason or another is then let go. Will he be able to make up the payments? As has been said, he should not be given refunds as refunds at that stage are of little use. It would also prove costly to join another pension scheme particularly if the person is in their early or mid-forties. When replying perhaps the Minister would indicate if such a person can be compensated. We are all aware of cases in the early fifties when some people did not qualify for a social welfare pension because they did not have the required number of stamps, they could not buy back in and they were caught in a no man's land. I am aware that one can transfer from one scheme to another but there is a gap because a person has not been able to make payments there should be a provision allowing him at a later stage to either buy back in or compensate in some way. If people fall on hard times for a couple of years, it is important that they should be able to get back to the scheme and compensate if necessary. The main thing is to have a proper monitoring and functioning of the system. There is no use saying: "the lads have gone off with the money, I am afraid your money and your payments are gone". What people want is security.

It is important that the annual report will mean an annual report and not that the 1990 report will arrive in 1994. This happens as can be seen when filing some company returns — sometimes the report will be circulated years after the appropriate 12 months. The Minister and the board should come down very heavily on defaulters.

It is interesting to note that fines of up to £1,000 will be applied for a first offence. For the non-payment of a television licence the fine is £500, although the State could be at a loss of only £62; but if somebody takes off with the pension fund there should be a charge of malpractice because the workers, their spouses and dependants can and are left without any pension. It is to be hoped that the annual report and full access will prevent anybody trying to make off with this money. The danger is that someone could be in Australia or Peru with the employees' contributions. In theory it is fine that there will be this watchdog and that there will be monitoring, but the difficulty arises in how it works in practice because of the number of schemes in operation. It is important to monitor the annual reports and examine them fully. I do not know how the board will operate, but when replying perhaps the Minister would address himself to that aspect and how he sees it at a practical level.

I suggest that the Minister consider a further reduction in the age limit qualification for the old age pension. During the Coalition Government in the late seventies, the age limit was reduced four years running by the late Frank Cluskey. The intention was to reduce the age limit further. Since that time the age limit has not been reduced. Now, 13 years on, perhaps this Minister would be the person to gain the kudos for reducing the age limit another year. Because of new work practices, part-time employment and job sharing, etc 65 years would be a more practical age for eligibility for the old age pension.

When does the Minister envisage the National Pensions Board being in operation? What time scale has he in mind? I would urge him to appoint the best available people to the board and not to reward hacks. I am sure this is a matter to which the Minister will address himself seriously as it is very important.

Another question relates to section 25 and the fees the trustees will pay to the board. What amount or what percentage does the Minister envisage? Has this been discussed? Obviously a certain amount must come from the public purse towards the establishment of the board. Admittedly, the Minister is not establishing a total bureaucracy but other boards have been set up where staffing was a problem. I do not think a very large staff will be required but given the implications and the amount of work involved, it is important that sufficient staff be available and I urge the Minister to ensure that that is provided.

I and the members of my party welcome this legislation. It is obvious that much work has gone into it. By its nature it is difficult legislation and it is a difficult area for which to legislate. Obviously, it is the result of very good work by various bodies, the Minister's staff. Because people are living longer, the provision of an adequate pension so that people can live out their days in dignity is very important. These people have given a service to their country. It is very important that these provisions are monitored, particularly in areas where there have been problems, where workers were paying weekly or monthly and suddenly things went wrong. When replying perhaps the Minister would address himself to the monitoring activities, the annual report, providing that the schemes will be adequate to do the job for which they were intended and that either the employee, his spouse or his dependants, will have an adequate pension at the end of their days.

First, there was a great deal of talk earlier today about filibustering. I am sorry that my colleague, Senator O'Keeffe, has temporarily left the House because he was one of those who was strongest in his attack on the alleged filibustering of the Opposition. I would say to Senator O'Keeffe that I have a prepared script which I am putting to one side now because most of the points I was going to make in that script have been covered already. I do not want to waste the time of the House going over ground that has been covered already.

This is a thoroughly good Bill and is one to which all sides of the House can give their full assent and support. It is a Bill which got a very good going over in the other House. The Minister showed himself as being very open to the suggestions made by various Opposition speakers in the other House and, in fact, took on board a considerable number of the points raised. Therefore, this legislation is that rare thing — a Bill which has gone through a very full process in the other House and needs very little changing.

At this stage I would also like to say that the way in which the Bill was presented to us here today is a model of the way in which a Bill should be presented. I would like to pay tribute to the Minister and his officials for their extraordinarily schematic, structured, organised presentation of this Bill today. It really is a model of how legislation should be presented explained in this House and is a credit to all concerned. I suspect that if it were submitted to an examiner probably it would receive a thesis award of some sort. I must compliment the Minister on its presentation; it is a model of clarity and full exposition.

In all of this, the Minister has followed a fairly consultative process. As is well known by now, this Bill originated with the National Pensions Board set up under the last Coalition Government in an endeavour to bring some order into this whole process. The Minister has based a great deal of the Bill on the work of that National Pensions Board but has also consulted with the various interested parties. Especially bearing in mind the changes effected in the other House, the Minister has come up with a Bill which is what it is supposed to be, that is, in the public interest.

In the Bill the balance is about right in that there is an underlying need to get the balance right between protecting the interests of those whose moneys are invested in pension funds and ensuring that pension funds continue to be instruments of economic growth. I contend it would have been a bad Bill had the Minister succumbed to the temptation to over-regulate or to limit the ability of pension funds to invest. On the other hand, it would have been a failure had the rights of those who invest not been fully protected. Therefore, the Minister has got the balance right so far as can be seen at this stage, although, clearly, things can happen. There is no underestimating the ingenuity of people affected by legislation — the class most notorious for this being accountants who are capable of taking any good scheme and making a mockery of it by the time they have finished with it — in terms of getting away from the legislators' intentions. But in so far as we can legislate in advance for what may happen, the Minister has got the balance right. I am glad that the new pensions board will have a monitoring role. I am sure that, in the spirit in which this Bill has progressed through both Houses, if flaws do appear, if there are evasions, the Minister will be quite prepared to examine them as time passes.

The key principles as to the success, or the criteria which will dictate the success or otherwise of this Bill are fairly straightforward. First, there is the question of transparency. It is vital that those involved in pension schemes see what is happening; that their right to know is fully protected; that they do not look on pension schemes as some type of Pandora's box, some sort of mystery beyond the ken of normal human beings; that the mystique and the mystery be stripped away; and that there be a full openness to what is happening. The Bill does get this degree of transparency right. Secondly, the Bill will be successful if it does ensure the accountability of the trustees, of those charged with the safeguarding of pension funds. As various speakers have pointed out, we have had instances of this accountability not being there and that trust having been betrayed. In addition the supervisory functions are well catered for. I am also glad that the question of participation which occupied so much time in the other House seems to have been fairly well resolved.

As many speakers have said — and as was mentioned by Senator Cosgrave who was last to speak — and as all of us in politics know, there is no sight more pathetic than that of people whose trust has been betrayed through a pension fund which has failed, especially through malpractice or neglect. All of us in our clinics have seen such examples. We have had people come to us who should be entering retirement with an ease of mind, with the right and ability to enjoy what they have worked for over the years but who find suddenly, at this crucial stage in their lives, that they are wracked by doubt, by uncertainty about the future, by worry, financial problems, etc. The people who find themselves, through no fault of theirs, in that position, deserve to be protected just as much as those who brought them into those circumstances deserve to be prosecuted. The Bill does go a long way to ensuring that the accountability of trustees and the rights of members are protected. In the same way the need to ensure the independence of all pension schemes from the companies with which they are associated is provided for in the Bill.

At this late stage in the debate I should like to pay a very warm tribute to the work of the National Pensions Board and to its members over the years. Their task was a difficult, complex and unglamorous one. They went about their business in a very workmanlike, expert way, bringing a great deal of common sense and expertise to bear on that task. Indeed, the State owes them a debt for the work they have done.

In talking about the National Pensions Board I should also like to pay tribute to the officials in the Minister's Department. Those of us in politics can get a very different view from that of the public officials in Government Departments. I would have my own ranking order of different Government Departments but I would have to say that I would place the people in the Minister's Department high on the list of committed public servants. Those of us who deal with officials there are afforded courtesy, goodwill but also the degree of expertise displayed in all of the approaches to this Bill reflects great credit on them.

The details and principles of this Bill have been adequately dealt with by speakers who preceded me. I want to ensure that there is some time remaining for Committee Stage. Therefore I shall conclude where I started by saying that this is a good Bill. It is one which all sides can commend to the House. I am happy that it has moved quickly through both Houses since it is a Bill for which people have waited a very long time. I know it will not come into effect this year because there are a lot of technical details to be put in place.

I wish the new pensions board well. They will have an important role to play. The Minister is lucky that he has available to him a pool of people who are expert, committed, and above reproach. I predict he will experience no difficulty in finding good, competent, public-spirited people to serve on the new pensions board.

Finally may I compliment the Minister on the way he has approached this Bill, on the detail and clarity of his exposition here this evening. He has done an extremely conscientious and competent job. He is also a Minister who does take this House seriously and treats it with great courtesy and respect. Therefore, it gives me great pleasure to commend this Bill to the House this evening.

I would like to thank Senators for their extensive and generally supportive contributions. It has been a very interesting debate on the implications of the Bill. It is a very complex, substantial and important Bill. Senators' contributions have highlighted the fact that it is an historic Bill and, at the same time, is quite complex with many inter-related elements and parts. Consequently, it takes some understanding. This relates back to Senator Manning's point about the support we had from the National Pensions Board, the industry generally and the people who contributed when the proposal was put up for discussion. There was considerable input also from my own public servants, and here I have to mention John Hayes, Gerry Mangan and Tim Quirk. They are normally not mentioned but, given what Senator Manning said, it is only right to mention the three people who were so deeply involved in the complexities of the Bill all the way through.

Before we come to Committee Stage, I will deal with a fair number of the points raised. I took it from what Senator Neville said that he has some experience in the area, perhaps on the insurance side. In any event, he said he had something like 20 years' experience in this whole area. He pointed out that it was a largely non-contentious Bill and that responsible employers had nothing to fear. He was concerned that the cost of funding pensions for people over 50 might be too high. In fact, the position is almost the opposite, in that under the funding arrangements the benefits of older employees are preserved, thus securing the position of older employees as time goes on, because the preserved benefit is behind them. One could go further and say that the preserved benefit would enhance the position of an older employee in transferring because nowadays one has to provide for a person's pension when one takes him on, and less would have to be provided if there is a preserved benefit. I do not think Senator Neville needs to be too concerned. Senator Neville was also concerned about the question of not funding for those under 30 years lest employers would try to ensure that they had as many employees as possible under 30. Senator Manning is right in saying that opting for five years before entry to pension schemes and preservation of pension rights achieves a reasonable balance. After five years' service people will be included in schemes.

The question of young people is a very old chestnut as far as pension schemes are concerned. Young people generally do not want to think much about pensions. The time for pensions is a long way away. It is not until they get past 35 years or around 40 years that they begin to think that a pension might be important. Consequently, they may cash in much of their benefit at an early stage and thus lose considerably, but cash in the hand looks very attractive. Senator Neville emphasised what I have been saying, that by cashing in one gets a very poor deal. He raised another interesting point, that when there is a fear that the money might not be there at the end of the day, one might feel happier cashing it in. Now, with preservation, there is no need for that fear. People can feel more confident about the money that is being preserved for them because of the arrangements in the Bill.

I had to smile when Senator Neville raised the question of the training of trustees. I tried to reduce my speech a little so as not to be too long here. I tried to give as comprehensive and as tight an explanation of such a complex Bill as I could. In doing so I decided to leave out reference to the training of trustees but, sure enough, Senator Neville has raised this as being something he would like to hear my views on. This, of course, will be a function of the board. Section 10 (1) (d) lays down that one of the functions of the board is to encourage the provision of appropriate training facilities for trustees of schemes. I attach particular importance to this and to the board's function in this regard and I will be asking the new board to give priority, over the first few years particularly, to encouraging employers to arrange for participation of members in the appointment of trustees. The whole area of the preparation of trustees for involvement in the schemes is something I will be asking the board to make provision for at the earliest stage. I hope that answers Senator Neville's concern in this regard.

Senator Neville also raised the question of the costs being carried by the industry. Relatively speaking, the costs are small and it is intended that the provisions will be efficient and cost effective. I do not think the costs would be any burden on an industry that has gross assets of the order of £10 billion but, notwithstanding that, I would be concerned that costs be tightly contained.

Senator Neville also referred to personnel managers and the importance of involving representatives of the Irish Personnel Management Institute. I will certainly consider these suggestions in the context of the three people who can be appointed to the board in addition to the people who already represent particular organisations.

Senator Ó Cuív raised a number of very interesting points. He put the whole question in a nutshell when he said that years of retirement should be years of security. That is increasingly important. Unfortunately people do not realise now how important that will be in the future. All over the developed world, and particularly in the developing world, the signs are that the cost of retirement is getting higher and the length of retirements is getting longer because people are living longer. This requires that there be greater insurance in relation to that.

As Senator Ó Cuív said, tax relief is a major incentive. This leads on to something which Senator Costello raised later about a national pensions schemes. In 1982, when I was Minister for Health and Social Welfare, I drew up details for a national pensions scheme. At the end of the day, however, someone has to pay for that and if employers and employees are contributing towards occupational pensions and they can be regulated so that we have a good occupational pension system as a supplement to the basic pension provided by the State then it will be an excellent combination. That is the way we are going at this stage. That has allowed the State to put more money into the basic pensions which are the priority, particularly for the many people who are still on assistance pensions. This means closing the gap and bringing those pensions up. That has enabled us to do that in the meantime. That is the direction we are going in at present. The tax reliefs are intended to encourage that whole development and are a very important instrument in supporting — and this cost the State a very substantially amount of money — the development of the occupational pension schemes.

Senator O'Keeffe also spoke about mobility as a feature of the future. Mobility will certainly be a feature of the future and it is very much more a feature now than it was in the past, as many of us will know. It is to provide for this kind of mobility that we are providing the measures in this Bill. This is not only important in Ireland, but also throughout the European Community. That is why at the recent meeting of Social Affairs Ministers in Ashford Castle, I pressed for agreement on a policy of convergence, and examining the whole question of supplementary and occupational pensions and trying to ensure that mobility of these pensions would be provided for within the Community. I think that is particularly important. It is especially important for people who have skills of various kinds, including teachers, who tend to travel nowadays and work within the Community before they come back. They take a job for a period before moving to some other institution within the Community and it is particularly important that they have mobility and there is a provision within the Community for mobility of pension rights. I know that there are those in the Community who will resist this development. I know that, because they have said they want to keep their top experts if they have them. If they have highly skilled people, they do not actually want them to move. They want pension arrangements which will, in effect, prevent mobility. That is against the spirit of the Community and what is being done in it. That is why I am so happy that all the Ministers agreed in Ashford Castle to pursue this as a matter of some urgency. The whole question of the occupational pensions and the inter-changeability of them within the Community is now being examined by the Commission.

Senator Harte raised a number of issues. He regarded the Bill as very desirable reforming legislation and something which workers will very much welcome. He highlighted the fact of the trust laws not being adequate. He also pointed out the discrepancy in the figures of £6.5 billion and the £10 billion. The £6.5 billion was an earlier figure, and its revaluation over the past few years has brought the figure up to £10 billion. That is the reality. That is where that came from. The figure at the time of the Pension Board report was more like £6.5 billion and I think that is the one to which Senator Harte was referring.

Senator Harte also raised the question of having more trade union representatives on the board and the inadequacy of fines. He seemed to miss the point that we actually increased the fines in the Dáil, and increased them very substantially, to £10,000. This was a reflection of the general view of Deputies, and obviously reflects the view held by Senators that the fines should be much higher. This has been done.

On the question of preservation and revaluation of pensions and the importance of keeping this under review, section 37 provides for regulations to set down procedures to be followed by the board. Again, in an amendment in the Dáil, this has been provided for by way of regulations.

The question of equal treatment was mentioned by Senator Harte. We have made some very important amendments in relation to that in the Dáil and I covered them in my Second Stage speech. As Senator Manning said, we have got a good balance on that at this time. The question of member trustees — a point mentioned by Senator Harte — is covered by section 62, which was the result of another amendment I made in the Dáil, and it substantially meets the questions raised in the Dáil in relation to member trustees.

Senator Foley welcomed the Bill as a major piece of legislation and particularly welcomed the equal treatment provisions. He referred to a report on Irish pensons and talked about them being lower than other countries. Here again, you have to compare like with like. If you take our current pensions rates — and Senator Foley mentioned that — our basic retirement or old age pensions are higher than the standard UK pensions or the pensions in the North of Ireland.

However, when you compare them with a pension in a country like Holland or the Netherlands, you are talking about a different situation. They have a different arrangement and scheme generally as mentioned by Senator Costello, where they have a national pension scheme with very high levels of contributions and a very high payment level, but no occupational pensions. They have gone the other route. That is one of the complexities within the Community. There are other aspects there; the public services are involved and there are various other differences. You have to compare like with like and in fairness to all parties over here, we have had concern particularly for the elderly. Within the resources available we have done a good deal to improve their pensions.

Senator Foley also raised the question of referring schemes to the Comptroller and Auditor General for an auditor's report. There are some 25,000 schemes and the Comptroller and Auditor General would be snowed under with them. If there are particular questions about reports, or if people are not happy with them, they will have the authority to ask The Pensions Board to pursue any reports about which there are questions and to ensure that standards are adhered to.

Senator Foley also raised the question about pension rights for periods in the public service and whether they are being preserved or are transferable to the commercial area or, perhaps, elsewhere, but the public service periods of pension are preserved, of course, at a fairly high rate. From that point of view, they are well covered.

There are anomalies in the public service area which will need to be looked at in due course because there are some groups and bodies which are totally within the transfer arrangements while others are not. There are people who have past service in the private sector — we have been talking about what is to happen in the whole area of past service here. What is to happen in the public sector in relation to former service? This is an issue which will have to be looked at in future.

Senator Jackman welcomed the Bill and felt it was very important. She spoke about a number of things, in particular the retirement age. In relation to retirement age, the position is that the date I am providing for is governed by the date elsewhere in the Bill and that date is 1 January 1993. It slots in with the other provisions. At the same time, it is true that people operating schemes will want to bear in mind the date of the judgment — 17 May 1990 — in the European Court of Justice. To comply with that it would be necessary that the application of the principle of equal treatment to retirement ages have retrospective effect from 17 May of this year, the date of the judgment.

As I said on Second Stage, I was including it. I know that Senator Jackman understood that. This means it will come into effect, together with everything else, on 1 January 1993, with the proviso in relation to 17 May for the schemes.

Senator Jackman was also concerned about survivors' benefits. I am taking the power in section 69 (3) to enable me, as Minister, to prescribe the date for equal treatment in relation to benefits for widows and widowers. It is my intention on setting the date to have regard to the timescale laid down in the next directive. If, however, there does not appear to be any immediate prospect of the proposal for that directive being adopted by the EC Council of Ministers within two years, I will at that stage prescribe a date for implementation.

Because this is a very complex and costly area we were anxious first to get the findings of the directive. These proposals will affect companies from the point of view of competition apart from any other consideration and we were anxious to do the same as other countries in the Community. As I said, they set about this work in 1987 but it has not yet been brought to a conclusion. What I am doing here is taking the power to prescribe in two years time the date for the implementation of equal treatment in relation to these benefits if there is no EC directive on the matter in the meantime. All I am saying at this stage is that a reasonable, practical, transitional period will have to be allowed. Obviously, if a directive is introduced we will know exactly where we are but if there is no directive we will have to decide, in consultation with the board, the most appropriate date for a transitional arrangement. I hope that is clear.

That is satisfactory.

This point will be of interest to Senator Costello also. An amendment was put forward in the Dáil in relation to the need to make provision for survivors benefits and retirement age.

I referred to the briefing of trustees. This will be a function of the board and I will be pursuing it with them very urgently. Senator Jackman asked what will happens if one scheme gets through, and collapses. The funding standard, together with the provisions in relation to the disclosure of information, the functions of the trustees and their new powers and the operations of the board in supervising all the schemes will cover this situation. The whole purpose of these provisions is to ensure that this will not happen. If, however, it does happen notwithstanding all of those arrangements, there are provisions in relation to liquidation and priority is given to pension schemes.

I am sure one could speculate about how someone could get away with funds at some stage but we cannot cover every situation. The trustees will have new and onerous responsibilities. People talk lightly about trustees and how everybody wants to be a trustee but under this Bill trustees will have to know what they are doing. Hence the importance of briefing for trustees. Many employees may want to appoint someone who has a more specialised knowledge to represent them as a trustee and that, of course, is provided for in the Bill as it stands. We are making every conceivable arrangement to try to ensure that they cannot get through the net, and this will be less likely to happen as all the provisions come into operation

I hope the trustees will have big bank balances.

They will also be subject to the fines in section 80, for example, a fine of £10,000. The main thing to ensure is that there is money in the fund, that the trustees are there for the fund and the money cannot be taken out of it except for the purposes for which it was intended. That is the real guarantee.

Senator Costello welcomed the Bill and highlighted its historic nature. He referred to some innovative aspects of the Bill and welcomed the steps we are taking now ahead of EC directives. Senator Costello was correct in saying that we are actually going ahead of the EC directives on some aspects and we are saying that if they do not implement them soon, we are going to implement them within two years.

Senator Costello referred to part-time employers. I know this is an area about which many Senators are concerned. This can give rise to problems in regard to pensions and my Department and officials have been examining it to see how best we can deal with it in the future. As Senator Costello said, it is tied up with the whole development of employment, for example, shared employment, people who have spent time at home and who want to come back into the work-force, the new arrangements which are being made and the flexibility provided to industry by part-time employment. These developments create a need for special pension arrangements to cover people in these situations. We are examining this area. I also asked the National Pensions Board to examine it about a year and a half ago and they will deal with it in their final report. We regard this as a very important area.

Senator Costello referred to the general social welfare provisions and asked about the possibility of reducing the age limit from 70 years to 66 years and perhaps even 60 years. There are various things I could say about this. First, when we joined the EC in the mid-seventies we got a big influx of money which meant, for instance, we no longer had to pay the milk bills, so to speak. This was the big agricultural bonus we got at that time. Up to then the taxpayer had to pay these bills, but under transitional arrangements the Community provided subsidies for this. This meant there was money left to improve our systems which were a long way behind. This is what was done with that money.

The problem now is that there are other factors involved. I got an allocation of £235 million out of which £216 million went straight into social welfare. One of the problems I am faced with is whether it would be better to reduce the old age pension age from 66 to 65 or to increase the basic payment people are getting. The basic payments have been brought up, which obviously was something that needed to be done. Consideration will have to be given in the future to the retirement age of 65 and the old age pension age of 66.

As Senator Costello said, reducing the retirement age to 60 years would be very attractive to the people who are under pressure at work and who may be looking for a breather at that stage. He referred in particular to teachers who are under a lot of pressure at work. I am conscious of that, but I am also aware of the factors operating on the other side, that is, on average people are living longer and costs are going up. That is the position not only in Ireland but in other countries also. In other countries the retirement age is actually going up because people are living so much longer.

The question of linking the pensions to the CPI is covered in the preservation in the sense that the 4 per cent is not the limit. That can be altered and reviewed if the CPI is running above it as there is provision in the Bill to do that and to take the advice of the pensions board in that regard. The 4 per cent is not an absolute fixed limit, and while it will be the norm, there is provision for the Minister to review that upper limit, if necessary.

I will not go into the cutbacks the Senator mentioned but I am glad he said that transport is free for the elderly — he strayed into hospitals and other areas in the middle of his contribution — but we have improved quite a number of our schemes.

The Senator mentioned the national pension scheme to which I referred separately. Obviously the board will be adequately staffed but, at the same time, we will have to be conscious of the need to be efficient. That will have to be worked out and there will have to be adequate staff to supervise the schemes.

Senator Cosgrave regards this as one of the most important Bills before the House for some time and mentioned a problem in regard to CIE workers, which is a substantial one. Senators will remember that in 1974 there were problems for some people and I was able to bring in pro rata pensions for them. That problem has been overcome. There is still a problem affecting CIE workers and other groups, the whole problem of mixed insurance when a person is in public service for a time and then changes to private or commercial activity. The question of mixed insurance has many ramifications and I have asked the pensions board to examine it. It will be part of their final report, so we will have some results in relation to that complex problem.

Senator Cosgrave also spoke about people who had spent 15 or 20 years in one employment and who might lose their jobs. Now that period of employment will be preserved for them which is an important benefit from their point of view. The Senator asked about people who were employed in a different job later; they will be subject to its terms and their previous employment will also be preserved for them. He may have been considering the question of putting extra money in to make up the years that might have been lost in between. That would really be a matter for the scheme in question and if it made provision for that eventuality, he would be covered.

Senator Cosgrave was concerned about costs, and I have dealt with that question. He also mentioned the establishment day. The establishment day is 1 January 1991. Hence, we are anxious to have the Bill through and to bring in all the regulations between now and the beginning of January. One of the earliest things we will do is to establish the board. We want to have this done as soon as possible, and this will be before 1 January 1991 so that they can adapt to their supervisory role, be organised and employ staff. There is an enormous amount of work to be done in regulations before that date. If you go through the Bill you will see a lot of provisions for regulations which have to be drawn up following suitable consultation. It is agreed generally, and it has been accepted here, that the best course is to get the main provisions into the Bill and to provide by way of regulations for many of the variations that might be needed subsequently because, of course, as Senator Manning pointed out, these may change and the regulations will provide for changes in many cases. That is in the whole design of the Bill and it is the right way to do it.

Senator Manning is right in saying that it has been a very interesting consultative process. The board published their report, we made it available to everybody, and the views received brought to light elements which the board had not considered. We then dealt with the matters we wanted included, but even when we came to the drafting stage some provisions were so technical they required a lot of work. There was a lot of consultation and that is why I have great confidence in the Bill. As Senator Manning said it is a Bill in the public interest and the balance is right. It is important not to over-regulate and we tried to find a balance between these two things. If flaws arise, we are prepared to review them which we are able to do through the regulations provision. In the Dáil, Members suggested that I should implement the regulations immediately but that would have been a mistake because we can adjust them and take the advice of the pensions board in relation to any of the provisions. In that sense, Senator Manning put his finger on something quite important.

I again thank all those involved in the preparation of the Bill, the National Pensions Board, public servants and Deputies and Senators who contributed to the Bill in its passage through the Oireachtas. Some of the points made are appropriate to the regulations, they have been noted and will be borne in mind. The preparation of the regulations will start after two or three weeks' break. I thank Senators for their contributions and recommend the Second Stage of the Bill to the House.

Question put and agreed to.

The next Stage, in accordance with the resolution of the House earlier today, is to be taken now.