I thank the Minister for appearing before the committee. Consideration of the Bill will proceed until 1 p.m., unless our business concludes at an earlier time. That is our objective. Amendments Nos. 1 and 23 to 28, inclusive, are related and can be discussed together by agreement. Is that agreed? Agreed.
Pensions (Amendment) Bill, 1995: Committee Stage.
Is there a list of related amendments available?
I will endeavour to obtain the list for the Deputy.
I move amendment No 1:
In page 3, between lines 8 and 9, to insert the following subsection:
"(2) The Minister shall ensure that, in guidelines issued by the Board, the precise interpretation of the words "misappropriate" and "being contemplated" as set out in section 34, shall be detailed.".
This amendment seeks clarification of the use of words "misappropriate" and "being contemplated". The term "being contemplated" has caused much disquiet. It is a nebulous term and the provision should be more tightly worded. There should also be a degree of transparency in relation to it. Perhaps the Minister will inform the committee as to the meaning of the terms in question?
As the Deputy stated, the amendment seeks to define the terms "misappropriate" and "being contemplated". Following consultations with the Pensions Board, the Office of the Attorney General and the relevant organisations which made submissions on the Bill, the text of section 34 is being amended and the words "being contemplated" are no longer being used. The reference to "guidelines" is also being removed because concerns were expressed about the legality of this particular approach. Facilitative guidelines may be issued by the Pensions Board under its general powers to make such guidelines. It is not my intention that the board would have the right to interpret the precise meaning of a term used in legislation which is not defined in that legislation. That would be a matter for the courts.
The term "misappropriate" is already used in a number of different Acts, without the provision of a precise definition. However, there is a legal interpretation and people are aware of what is a misappropriation. The provision of a definition might inadvertently limit the scope of the term. As I understand it, a misappropriation occurs when scheme assets are appropriated by a person not entitled to them under the provisions of that scheme and the relevant laws, or are appropriated to the use or benefit of any person otherwise than in accordance with the provisions of the scheme or any relevant laws. That is a lay person's definition of the meaning of "misappropriation". That is the current position and the Deputy's amendment is not applicable to the Act.
It is not that the amendment is not applicable, but that the Minister is taking action to meet the point raised by Deputy Walsh.
It not longer applies.
It does.
I am not making a political point, I am simply making a statement of fact.
The amendment applies at present because the Bill has not been passed. Until it is passed, the Minister's statement is not technically correct. As far as Deputy Walsh is concerned, the Minister's action meets the aim of the amendment.
Amendment No. 28 is being discussed with amendment No. 1. This amendment seeks to delete lines 48 and 49 in page 21 of the Bill which state:
(2) The publication of any report made to the Board under section 83(1) shall be privileged.".
The amendment proposes substituting the following:
85.—For the purposes of the law of defamation, the publication by the Board of any report made to it—
(a) under section 83(1), or
(b) otherwise of any matter concerning the state and conduct of a scheme,
shall be absolutely privileged.'.".
Essentially the Minister is altering the situation from being privileged to being absolutely privileged. Why is that necessary? Is absolute privilege not normally confined to a few areas? For example, the Dáil and the courts have absolute privilege. There may be some other limited areas in which absolute privilege applies. Perhaps the Minister could inform the committee as to where this is the case?
Acceptance of the amendment will mean that any report made by the board about an individual or company will be absolutely privileged. This will protect the board, even if it makes a malicious allegation about a person. Ordinary, qualified privilege would not apply if it could be shown that malice was involved in a report. That is a reasonable situation. If there was any malice involved in what the board might state in relation to a particular company, it would be obliged to stand over such statements in present circumstances. The Minister's amendment gives the board absolute privilege. Does this apply to a member of the board or to a report of the board? What exactly is covered by it? How extensive is it in terms of the board's work?
This is a very important principle. While it is convenient for the board to have absolute privilege, it is a bit unusual for semi-State boards to have such a degree of privilege and be absolved from responsibility for malicious statements, especially where they will make decisions about particular companies. What is covered by this amendment, which states "the publication by the board of any report made to it (a) under section 83(1), or (b) otherwise of any matter concerning the state and conduct of a scheme, shall be absolutely privileged"? We should be very clear about that. It is, as I understand it, fairly unusual and gives the level of privilege of the Dáil Chamber to this board. I am interested in the thinking behind it.
It does not give the board the same privilege as the Dáil Chamber. That would imply anything said by the board in any circumstances would be privileged, which is not the case. We are dealing here with the question of privilege for the board in relation to reports it will publish arising from reports or complaints to it of misappropriation of funds by someone operating a pensions fund. It is a very narrowly focused privilege. The purpose of defining it as absolute privilege is to ensure a situation could not arise where the board, having had information provided to it and made a report, would be then precluded from making its findings known to the trustees of a fund or any other relevant parties as a result of fear of defamation actions.
The amendment clearly states "For the purposes of the law of defamation, the publication by the board of any report made to it (a) under section 83(1), or (b) otherwise of any matter concerning the state and conduct of a scheme, shall be absolutely privileged". If we did not include the word "absolutely" there is a risk it might be considered they only had partial privilege, or qualified privilege as it is commonly known. The Deputy asked who else has this kind of absolute privilege, and I understand the Ombudsman does.
When we originally drafted the section on privilege it was understood it implied absolute privilege. Representative groups in the pensions area asked us to make that clearly beyond doubt, which is what we are seeking to do. We consulted the Attorney General on this matter, and he is quite happy with what we propose to do.
It is not really a question of the technicality — it is technically feasible — but of what is being done which affects the pension groups and people working in these companies. I appreciate it is not directly comparable with the Dáil in all its proceedings because it only relates to the reports. Nevertheless, it means a report motivated by malice can be published with absolute privilege. That could be quite dangerous in commercial terms.
What are the implications of this further down the line? Could a company submit a report about another company for intentionally malicious reasons? The board would not have to worry about publishing such a report because it is covered by this absolute privilege but the company would be damaged. I appreciate what the Minister said about qualified privilege, but situations of malicious intent could arise. To extend the board's privilege that far, the Minister would need to be very happy it was necessary to do so.
The Minister cited the Ombudsman as an example of someone with this privilege. However, the Ombudsman is a very special and singular office, which is almost quasi-judicial. In that sense, it is not surprising the Ombudsman has that level of privilege. The board would have to be seen to be above any suspicion in its activities or intentions in publishing any documents. It raises questions. However, it may not happen as the members of the board may be always far removed from the day to day operations of companies and businesses, in the way the Ombudsman is.
The Ombudsman is statutorily removed from all day to day activities and is paid independently. However, while material coming to the Ombudsman is absolutely privileged, the Ombudsman has to decide whether there is a danger of malice and whether it should be published. We will now confer on a board, the membership of which will change from time to time, a power given to the Ombudsman and Dáil Éireann. In giving absolute privilege to Dáil Éireann, we ensure the Ceann Comhairle is there to maintain order and insist this privilege is not used for malicious purposes.
These are my concerns. I received the green list this morning and it raises questions as to whether it is necessary to go as far as this. Presumably the Minister will advise that the companies giving reports want to be sure they are completely covered. Given the privilege they have at present, the publication of any report made to the board shall be privileged. There is privilege unless there is malice, in which case there is no privilege. This is what defamation is about. What is the Minister's view on this? Is he happy that this absolute privilege is necessary and will not be abused?
We are considering absolute privilege for the National Pensions Board. The board is made up of representatives of industry and the membership, by way of trustees, of the pensions schemes. Their purpose is to regulate the industry to ensure it is operating in the interests of those who make their contributions to pensions funds. It is there as a protective mechanism for the members of the pensions funds to ensure that money is properly used etc.
While various interests in the industry and the trustees make their nominations, the board is appointed by the Minister of the day. Clearly any Minister will exercise judgement in appointing members of the board to ensure that people of integrity are appointed. There is no evidence that boards appointed by previous Ministers would be in any way malicious or out to gain advantage over people operating in the industry. I have no doubt that nobody on the board that I have appointed this year would be so inclined.
We are dealing here with absolute privilege for a report which may be published by the board, not by individual members of the board. This privilege applies to the board itself. The board is not obliged to publish a report on every complaint it may receive. It will consider all complaints and reports and make its judgment as to whether action needs to be taken. Some may be minor, but there may be serious complaints from time to time which have to be dealt with.
It will be for the board to decide whether, in the interests of the industry at large, specific players in the industry or the members of the scheme, a report should be published. It is only where a report is published by the board that this absolute privilege would apply.
The privilege that applies to people who make reports to the board is a qualified privilege. Any person, company or otherwise who might make a report which it can be shown was of a malicious nature would be liable to prosecution for defamation in such circumstances. This is the protection which the industry and the members of pension funds have against the kind of malicious reporting that might take place.
While a person may make a report from malicious intent, it does not mean that the report is inaccurate or untrue. The person may be conveying accurate information about abuse. While the purpose in doing so may well be malicious, nevertheless this is something we must take into account when considering the report. The board needs this absolute privilege to guarantee and provide the security it needs to do its business.
The Minister advises that, for the purposes of the law of defamation, a relevant person such as a solicitor, accountant or trustee, who has cause to believe that a material misappropriation or fraudulent conversion of the resources of the scheme to which he or she is a relevant person has occurred, is occurring or is to be attempted shall, as soon as practicable, give to the board a report in writing of the particulars of the misappropriation or conversion as the case may be. He also advises that, where any such report is given to the board by such a person under the terms of the proposed legislation, publication by the board shall result in absolute privilege for the board.
Effectively the Minister advises that if something malicious is said by such a person, there would still be a claim against that person as distinct from a claim against the board. It removes the board from any malicious report that it may publish, even though the publication of the report may be the event that causes damage to the company, an individual or a group of individuals within the company. The publication by the board would be free in the sense that it would be absolutely privileged, but the report could be challenged on the grounds of defamation, which means the individual making the report could be challenged. Is this correct?
A person has qualified privilege in making a report to the board setting out a view that there is misappropriation or impropriety of some kind in the running of the scheme. If a court decides that there is defamation the person concerned is liable. However, where the board receives such a report and in its judgment decides it is necessary to publish its report it should be protected against the possibility of action with regard to defamation. Otherwise there could be extremely difficult situations where the board considers it necessary to make something public in the interests of the members of a pension scheme. The primary responsibility of the board is to protect the members of the pension schemes and that is what people are appointed to the board to do. To suggest that the board would publish a report which would be deliberately malicious or damaging is taking the case too far. It may be that a report, when published, may damage a particular company or otherwise, but that will be because it is reporting on a misappropriation, not because there is no justification for it. If the board finds there is no justification for a particular complaint and considers it necessary to make the matter public, that would be equally in the interest of the company concerned.
We need to protect the board, both from the possibility of defamation proceedings by a company who may feel aggrieved at a complaint against it or, indeed, by the complainant who may feel they have been identified as having made the complaint maliciously. It is not as straightforward as simply protecting a company which is operating or misappropriating a pension fund; it is primarily a matter of protecting the members of the pension fund.
I must emphasis that the members of the Pensions Board and those who are likely to be on that board in future are selected for their responsibility, their knowledge of the business, and their interest and concern to ensure the pensions industry is absolutely above board.
The Minister mentioned a deliberately malicious report. The trouble is that you do not know it is malicious when it is made.
The point I made was that a report may well be an accurate one.
It could be accurate and malicious.
If it is accurate even though it is malicious, the board must still act on it.
If the report is accurate, presumably the board will have no difficulty in dealing with it.
Suppose a person made a complaint for a malicious reason, the board examined that complaint, found it to be correct but also found that the reason it was made in the first place was for some competitive advantage. If the board published a report identifying that the complaint was accurate but was made in the first instance for malicious reasons and if the board did not have absolute privilege, the complainant could then pursue the board for identifying them as malicious.
There are all sorts of variations here and on balance it is necessary to protect the board in all sorts of unforeseen circumstances which might arise. It is impossible to identify every circumstance which might arise, but in order to give the board the freedom to do its business and protect the contributors to pension funds, the board needs this absolute guarantee that its members can not be pursued for doing the job which we are asking them to do.
I thank the Minister for responding to amendment No. 1 in a sensible way. I want to speak on my other amendment, amendment No. 27, which reads:
In page 21, lines 38 and 39, to delete ", whether in writing or otherwise," and substitute "in writing".
It is my view that any report to the board should be in writing. I would be concerned about people telephoning the board and making a frivolous or mischievous complaint. I do not think such a provision would put any great demand on a person who wished to make a complaint or report to the board, and it need not be a tome. It would provide a safeguard for the board in that it would not have to act on verbal communications.
The amendment seeks to limit the protection to people who make such reports in writing only. The making of reports by means other than in writing relates to voluntary reporting only. Where a relevant person is obliged to make a report if they find there is something amiss with a scheme, that report must be made in writing. It is only where a person is voluntarily making a report that it may be done otherwise.
It is felt that if a person makes a telephone call or comes into the Pensions Board's office to make a voluntary report and if this report is made in good faith — as the section specifies it must be — I see no reason why protection should not extend to that person.
The objective of the reporting mechanism is to protect the pensions of individual members of pension schemes and to encourage the making of voluntary reports where pensions could be in jeopardy. I do not wish to limit it to reports in writing. Any person making a malicious report, whether in writing or verbally, will not be afforded any protection. I am not prepared to accept the Deputy's amendment.
The Minister keeps coming back to the person making the report, whether verbal or in writing, either of which is acceptable as far as he is concerned. However, the individual may have little or no means. Once the report goes to the board and is published by it, the Minister has blocked off any compensation to a person who may be seriously damaged. The person who made malicious allegations would not be capable of contributing in any way.
I agree it is important to ensure every report which could be made about a scheme is made, that the information is made available and that the trustees, members of schemes or relevant persons who are dealing with them and have information are in a position to come forward and bring that information to the board at the earliest possible time. That is right and it should be done.
The board is privileged currently with regard to any of these reports it may make. I know the board may be concerned that it might make a mistake in a report. It could be misled by somebody and could then be open to damages for making the report. By giving absolute privilege, the Minister is putting less responsibility on the board to ensure that what it publishes is accurate, correct and without malice.
I understand the industry's reasons for wanting this provision, and I understand the Minister's reasons and those of the board. It is easy to understand the board's reasons because it emerges with this rare absolute privilege. However, I am a little uneasy about what we are providing for in that regard. Will the Minister look carefully at this between now and Report Stage and consider further the points we have raised? If he still feels he must go ahead with it, so be it. It is the liberal in me who is uneasy — I am concerned for the ordinary decent citizen who may be put at a great disadvantage by this. Unfairness could intrude through the provision of powers of this kind, which are only given in rare circumstances. It seems to be beyond what is necessary for the purposes of my Bill. The Minister has explained what is happening and how it applies as clearly as he can, so I will not push this issue further at this point.
Will the Minister consider deleting the phrase "or otherwise"? If someone calls into or rings the pension board with a complaint or makes a voluntary report to the pension board, it is reasonable to ask him to put it in writing. This will prevent the board going to unnecessary trouble and difficulty in investigating a frivolous or mischievous complaint. It would not be a deterrent to a person making a voluntary report to the pension board to ask him to put it in writing.
I am not inclined to accept what Deputy Walsh proposes in relation to reporting. Many Departments receive verbal reports over the telephone about certain schemes and in my Department all such complaints are followed up. It would be a mistake to discourage verbal reports or to discourage the board from investigating unwritten reports. A person may voluntarily come forward with verbal information which may be of significance to the operation of a scheme and if we were to write into the Bill that the report must be in writing, the board may decide it was not in a position to pursue such a report. We would do a disservice to members of the scheme in obliging people to make voluntary reports in writing only. It would not be in the interest of members or industry.
On Deputy Woods' point about absolute privilege, I am sure he appreciates this position has not been arrived at lightly — it has been discussed at length within the Department, with members of the pension board and various interested bodies. We have come to the conclusion that, on balance, it is necessary to provide this absolute privilege. The board is not obliged to publish all reports it prepares on these matters. It can and will use its judgment as to the impact the publication of a report might have. I have no doubt the current or any future board will exercise that judgment in a fair and balanced way. The damage which might be done to a body or person arising from a report by the pensions board would arise from a finding that there was misappropriation or misuse of pension funds. The damage would not arise primarily, if at all, because the report was initiated for reasons of malice. It is the findings of the report which would be damaging rather than the reasons the complaint was made in the first instance. I appreciate what Deputy Woods is seeking to establish but on balance absolute privilege is necessary to ensure the board will feel free to do the job we are giving it. That is an onerous task, given the size of the industry and its value, not only to the economy — it has investments of about £16,000 million — but also to the hundreds of thousands who have their savings invested for their retirement in the industry. It is essential that we have a board which is free to carry out its duties under the Acts.
As well as amendment No. 1 we are discussing amendments Nos. 23 to 28, inclusive, in the Minister's name. I ask him to avail of the opportunity to discuss these amendments now — they can be moved when we come to them.
The purpose of amendment No. 23 is to ensure that protection against unfair dismissal is extended to a person who makes a compulsory report to the pensions board under section 83 or makes a voluntary report in good faith on any matter concerning the State or the conduct of a scheme. Amendment No. 24 clarifies the definition of an investment business firm in the context of the definition of a "relevant person".
Amendment No. 25 deletes the reference to guidelines issued by the pensions board, as there was some concern that such guidelines could be found to be ultra vires the Act. The board may still decide to issue guidelines on this section but they will be of a purely facilitative nature. This amendment also replaces the phrase “or is being contemplated” with “or is to be attempted”. I indicated on Second Stage that a different wording was being considered, in consultation with the Office of the Attorney General and the pensions board. I understand the pensions industry generally is happy with this phrase. The new subsection (2) in section 83, clarifies that the compulsory reporting requirement only applies to any belief formed after the enactment of the Bill.
Amendment No. 26 puts beyond any doubt that barristers and solicitors are not subject to the compulsory reporting requirements when assisting or advising in the preparation of legal proceedings. While barristers or solicitors are not defined as relevant persons under section 82, there was some concern that a barrister or solicitor who was also a relevant person — for example, through being a trustee or having delegated trustee functions — could in certain rare circumstances possibly be obliged to report to the pensions board information which he or she only obtained in the course of assisting or advising in the preparation of legal proceedings.
I welcome these amendments, which are sensible and tidy up matters a degree further. Amendment No. 23 gives protection to employees, so that if they make a report they will not be dismissed or will not be subject to retaliatory action. That is extremely important and I welcome those amendments. I will not press my own amendment in view of the Minister's response.
I also welcome amendment No. 23 which protects a person who makes a voluntary report on any matter.
Amendment No. 26 relates to the prosecution of an offence as it relates to barristers and solicitors. A barrister or a solicitor would have the normal privilege which applies to an attorney/client relationship. I take it that is why the Minister mentioned that this could be breached in exceptional circumstances. Can he tell us where it might apply?
In some rare circumstances a barrister or a solicitor might also be a relevant person as defined in the Act. For example, they may be trustees or have delegated trustee functions. As the section stands they would be obliged to report to the Pensions Board information obtained in the course of assisting or advising on the preparation of legal proceedings. We want to avoid that situation and that is why we are proposing amendment No. 26.
Am I correct in saying that it deals with a situation where a person has a dual role?
Yes, where they come by the information because of their engagement in legal matters as distinct from trusteeship or delegated trustee functions.
Amendment, by leave, withdrawn.
Section 1 agreed to.
Section 2 agreed to.
SECTION 3.
Amendment No. 2 is out of order.
Are you ruling the entire amendment out of order? I assume that is because there is a cost involved. My intention was to allow people at 45 years of age to have 20 per cent of reckonable earnings allowed.
There is a potential charge on the Revenue.
The Finance Bill allows a 20 per cent allowance for self-employed people at 55 years of age. Some Minister for Finance, together with a Minister for Social Welfare, should examine the possibility of allowing the same privilege, at the very least, to PAYE workers who are members of occupational pension schemes.
Amendment No. 2 proposes that State pensions should be given on a pro rata basis. This would mean that persons who do not qualify for a pension at present because of insufficient contributions would become entitled to a pension.
Are you ruling that out as well?
Yes. The amendment also proposes the establishment by the Minister of a pensions ombudsman. In the absence of any provision to the contrary it must be assumed that the not insubstantial costs of establishment and resourcing such an office would fall to met by the State, thus imposing a potential charge on the Revenue.
Amendment No. 2 not moved.
Question proposed: "That section 3 stand part of the Bill."
Deputy Walsh made a point about his amendment, which was ruled out of order. He is entitled to talk about the issue on the section. Deputy Walsh talked about the importance of appointing a pensions ombudsman to protect the interests of pensioners. It can be said that the board was intended to act as the ombudsman for pensioners. We have consolidated the position of the board and almost made it into an ombudsman because we are giving it the absolute privilege in relation to reports which is associated with an ombudsman.
The other issues raised by Deputy Walsh relate to making provision for State pro rata pensions based on the number of contributions made by a tax-payer on reaching retirement age. Could the Minister tell us what progress is being made in the area of the pro ratapensions?
The proposal in the amendment, which is out of order, is more appropriate to the annual Social Welfare Bill than to this Bill. As the Deputy is aware, the question of pro rata pensions is extremely complex and is being considered in the context of the final report of the National Pensions Board entitled Developing the National Pensions System. I have said on a number of occasions in response to questions in the House that this report is under consideration in my Department. It is my intention to bring forward proposals based on recommendations contained in the report in due course. I hope to be in a position to do that in the Social Welfare Bill of 1997.
Question put and agreed to.
NEW SECTION.
I move amendment No. 3:
In page 4, before section 4, to insert the following new section:
"4. — Section 10(1) of the Principal Act is hereby amended by the substitution for paragraph (c) of the following paragraphs:
'(c) to issue guidelines or guidance notes on the duties and responsibilities of trustees of schemes and codes of practice on specific aspects of their responsibilities;
(cc) to issue guidelines or guidance notes generally on the operation of this Act and on the provisions of the Family Law Act, 1995, relating to occupational pension schemes;’.”.
This amendment seeks to clarify that the Pensions Board may issue guidelines or guidance notes, which are effectively the same thing. It also gives the board the power to issue guidelines or guidance notes in relation to the general operation of the Pensions Act, 1990 and the occupational pensions provisions of the Family Law Act, 1995. It is my intention to bring forward on Report Stage certain amendments to the Family Law Act, 1995 dealing with the powers to make regulations in relation to occupational pensions schemes.
I welcome the amendment and the Minister's undertaking that he will bring forward some additional amendments on Report Stage to take account of the Family Law Act. Amendment No. 19 in my name relates to the same area. Sections 12 and 13 of the Family Law Act provide for the splitting of pensions. The Minister has stated that guidelines and guidance notes will be issued on the operation of this Act and provisions of the Family Law Act 1995 relating to occupational pension schemes. I want clarification on the splitting of pension funds in the event of the break up of partnerships or spouses.
The only purpose of the amendment before us is to ensure that the board can produce guidelines on the implementation of the Act. In that context I indicated my intention to bring forward an amendment on Report Stage to the Family Law Act relating to powers to make regulations under occupational pensions schemes. I expected that we would discuss amendment No. 19, to which Deputy Walsh refers. It is not quite the same thing that we are trying to do in relation to amendment No. 3. My advice is that it would be preferable to leave what the Deputy is proposing with amendment No. 19 to an amendment of the Act by the Minister directly responsible for that Act.
The first part of the amendment is very simple. There is provision in the main Act to issue guidelines on the duties and responsibilities of trustees of schemes. The Minister is extending that part to include guidelines or guidance notes on the duties and responsibilities of trustees of schemes and codes of practice. That is quite clear cut and this is just making sure that there is cover for it in the legislation.
The second part of the amendment relates to the Family Law Act. It would be preferable to have all pension matters in one Act under pensions law. We are creating a situation now where we have to go to other Acts to get pieces which relate to this and to give the Minister power to make regulations on aspects which are covered in the Family Law Act. That could possibly be sorted out in a consolidation Act where one has all the pensions legislation together.
Amendment agreed to.
Section 4 deleted.