Dáil Éireann díospóireacht -
Tuesday, 3 Mar 1998

Vol. 488 No. 1

Written Answers - Pension Provisions.

Gay Mitchell

Ceist:

146 Mr. G. Mitchell asked the Minister for Finance the attitude the Revenue Commissioners will take to a proposal to allow existing employees remain in the Irish airlines employees' pension scheme following the transfer of the ownership of TEAM Aer Lingus to FLS; and if he will ask for a detailed statement from the Revenue Commissioners in the circumstances (details supplied). [5445/98]

Minister for Finance (Mr. McCreevy)

I am advised by the Revenue Commissioners that the general approach, as part of their published code of approval practice, is to approve a group scheme in which two or more employers participate provided that the employers are sufficiently closely associated to be treated as carrying on a single trade or undertaking. This condition is met if the employers all belong to a group of companies forming a single financial unit, e.g. if they are parent and subsidiary, or fellow subsidiaries of the same parent. For this purpose, a company may be regarded as a subsidiary if at least 50 per cent of its equity share capital is owned by the other, directly or indirectly. Alternatively, even though no parent-subsidiary relationship exists, there may be enough links between the employers to warrant a group scheme based on close association through permanent community of interest. Such links could be common management or shareholder, interchangeable or jointly employed staff and interdependent operations e.g. one selling the bulk of the other's products.

However, it is a requirement for approval of a group scheme that the rules must provide for the withdrawal of an employer who ceases to be sufficiently closely associated with, or related to, the other employer participants in that scheme. Where the seceding employer is continuing in business, the assets of the group scheme which would relate to that employer and its employees may form the nucleus of a new scheme, or be transferred to another group scheme in which the employer has become eligible to participate. In addition, there may be circumstances where a transfer payment would be made to an existing scheme of a new employer i.e. in a takeover where the business of the company being taken over would be integrated with the existing business of the purchasing company. Existing rules provide for certain transitional arrangements following a transfer of ownership of a company. This is the general position.

It would not be appropriate for me to go into details on the implications of a possible transfer of ownership of TEAM Aer Lingus to an outside company. It can be said, however, that in relation to a possible transfer of ownership of TEAM Aer Lingus, any arrangements entered into in that connection, in respect of pensions, would have to comply with the published code of approval practice.