Social Welfare Bill 2014: Report Stage (Resumed) and Final Stage

Debate resumed on amendment No. 18:
In page 4, between lines 21 and 22, to insert the following:
“Non-Contributory State Pension
4. The Minister for Social Protection shall review the impact of the closure or significant deterioration in the value of defined benefit pension schemes on expenditure on the State Pension (non-contributory) and produce a strategy to prevent further closures or decline in value so that the State’s exposure is reduced and pensioners’ incomes are protected.”.

Obviously I strongly support these amendments. I echo the comments of colleagues last week when we began the discussion of these amendments. Having just listened to the debate on the Topical Issue raised by Deputy Creighton, we know that the Minister, Deputy Donohoe, feels the pain of the deferred pensioners and believes it is a shocking situation. However, this is cold comfort for the pensioners and their families, and I believe the Tánaiste has expressed similar views.

In a week when some effort was made to address the plight of the Waterford Glass pensioners, it is very sad that the pensioners of the airport companies are still left in this shocking situation. As I said last week, I have received streams of e-mails and have met delegations of deferred pensioners. They are feeling great stress over the prospect of what might happen to their pensions after 30, 35, 40 or even 42 years of work for Aer Lingus or DAA. It is a truly shocking situation.

The Minister outlined some of the parameters of the issue on the last occasion. Obviously the 2009 Act has played a detrimental role in the plight of these pensioners. The ability of the companies, Aer Lingus in particular-----

The Deputy should stick to the amendment.

-----to just walk away from its obligations is truly shocking. While we know that the Minister, Deputy Donohoe, and the Tánaiste have both expressed deep sympathy for the deferred pensioners and the retired workforce - the 10,000 people involved - much more significant legislative action is necessary. Therefore, I again support the amendments before us.

I call Deputy Ryan.

This set of amendments-----

Before the Deputy starts, I remind the House that we are debating amendments Nos. 18 to 21, inclusive, 25, 27 and 28 together.

The Tánaiste and Minister for Social Protection has indicated that there is an error in amendment No. 22, which she intends to request be corrected. The reference in amendment No. 22 to the Social Welfare and Pensions Act 2013 should be to the Social Welfare and Pensions (No. 2) Act 2013. We will note all those things. I call Deputy Ryan to proceed.

This set of amendments is driven by what is happening to the-----

On a point of order, is there a formal amendment from the Minister?

About the amendment that the Ceann Comhairle mentioned.

We have not reached it yet. I am just giving notice.

Yes, but is it going to be circulated?

It is only a correction to an error in the wording. It has no significance as such. It should be called the (No. 2) Act instead of the Social Welfare and Pensions Act 2013.

From a procedural point of view, is there an actual amendment to that?

I was asked to point it out when I took the Chair, so there is no need. I call Deputy Ryan.

Thank you, a Cheann Comhairle. I welcome the Leas-Cheann Comhairle who is taking the Chair. These amendments are driven by what is happening to the Irish airlines superannuation scheme, which is affecting airport workers both past and present. The central problem is that the IAS scheme is in the region of €720 million in deficit. I am reliably informed that if the scheme were wound up now, without any resolution on the table, each beneficiary of the scheme would receive approximately 5% of their entitlement. This incredible deficit is a result of the companies abusing the scheme over many years. The scheme was used as a slush fund to get people out of the companies, in actions which could possibly have been outside the law. It was a flagrant abuse of the scheme and the result has left workers, both past and present, in a desperate situation. The trustees of the scheme in particular have really let down the beneficiaries by allowing it to be abused to the point of massive deficit.

There is a proposal on the table for the beneficiaries which would mean winding up the existing scheme and setting up a new defined contribution scheme. This would see the three groups within the scheme face a level of cuts which vary depending on their standing within the IAS scheme. There are three categories of beneficiary: active workers, retired members, and deferred members, which are those who have left the company but have not yet reached retirement age. Each group of beneficiary is facing a cut in their pension entitlement and it would be fair to say that each group would see the cause and solution to their situation in different ways.

The active members are due to take a 10% cut, with retired members in line to take cuts ranging from 1% to 20%, and with deferred members in line to take cuts of up to 60%. The disproportionate level of pain for the deferred members is the result of a complex set of circumstances. However, this does not mask the fact that the deferred members have cause to be especially aggrieved by these cuts. The active workers I have spoken to see this matter as an industrial relations dispute, and they have enacted an industrial relations response through their unions. Retired members see the source of their change in fortunes in the 2013 social welfare legislation which created the law allowing schemes in deficit to include retired members to burden share in order to move schemes out of deficit or when winding up. It was then up to trustees of the scheme to make a decision based on their legal requirement to treat all members equitably. The trustees of this scheme have included cuts to retired members in the winding up proposal for the IAS scheme.

Deferred members feel they are victims of the passing of the 2009 social welfare legislation by the previous Government, which moved the deferred members out of the protections provided to retired members and into the same grouping as the active members. Deferred members are seeking a legislative amendment to place them back within the level of protections which are still afforded to retired members. Some of those amendments are before the House today.

Over the course of this year, I have been working with my colleagues in the Labour Party, from Dublin to Clare, to pursue any possible solution to the matter of the disproportionate hit taken by the deferred members. The Minister will attest to our persistent efforts to find a solution and the various meetings that took place. Through our representations, it has become clear that the one bottom line on this matter is that further money will be required to resolve it in a more equitable manner, but where does the money come from? The companies would argue that they have already provided funds towards a solution in winding up the scheme and setting up the new defined contribution scheme. This is despite shareholder resistance, in particular from one notable shareholder which did not want to give any money towards a new pension scheme. The companies are reportedly adamant that there will be no more money put into it. With no legal requirement that the companies provide any funds at all and the message from the companies that they have already gone as far as they are willing to go, there is uncertainty as to what would happen if the existing proposal on the table was revisited.

If these amendments were to be accepted or passed today, would the trustees be required to share the burden again to make fair the injustice of what has happened to deferred members? What would happen then? Deferred members could achieve further equity, but without more cash the equity would have to come from existing money within the resolution proposal. Aer Lingus workers have already voted in favour of the proposal, so the consequence would be a nullification of that vote and a return to the company to seek a further distribution of funds. I presume that if this were on the table, the active workers would go back to the company and look for more money, similar to what they would lose in a redistribution. How would the company respond to such a move? It is unknown but, given the position the company has taken in the recent past, it is not unreasonable to assume that the company would disregard such a move and play hardball. Would the active members then threaten industrial action? Would this threat work? Would the pressure force the company to provide more money? Would the active members take industrial action? Would this achieve their objectives? If not, and if the amendment ensured that the existing funds be further redistributed among the three groupings, would the active members then replace the deferred members as the most aggrieved group? The question then is whether the State should contribute funds towards the resolution of this dispute.

I am firmly of the view that the State should be strongly active in pushing the companies to provide more funds for the deferred members from outside the current resolution proposals and I believe more time should have been given to try to achieve this. We have reliably been informed that the sum it would take to resolve the matter is approximately €50 million. In the context of the cash reserves within the companies, this is not an extraordinary amount of money. It is possible that, with negotiation, a lower sum might have been acceptable. There is a moral obligation on the companies to act on this matter and provide some solution. For too long they used the pension pot as a slush fund to achieve efficiencies and entice workers out of the companies. They should not get away with it. They have the money to resolve this. The trustees should also be called to account for their lack of action.

There is a lot of uncertainty and many questions for which we do not know the answers. There are roads which could be taken which are risky and none of us knows the ramifications of taking such choices. The deferred members are taking a disproportionate hit and I believe it is incumbent on the companies to find further funds to address this injustice. It is incumbent upon the State to push the companies to find such a resolution. I look forward to the Minister's response to these amendments and to the issues I have raised.

I speak in support of amendment No. 20 which has been tabled by my colleague, Deputy Ó Snodaigh. Sinn Féin appreciates the desperate situation that deferred members of the IASS are left in. Deputy Mary Lou McDonald and I recently met representatives of the IASS deferred group. I knew their story but hearing it again from their own mouths was shocking. An appeals process is necessary for these people. Deferred members of defined benefit schemes are particularly vulnerable, given their exclusion from the industrial relations process and the fact that the current legislation offers grossly inadequate protection. These issues have been raised repeatedly with the responsible Minister, Deputy Burton, over recent years.

I have also raised them with the current and previous Minister for Transport, Tourism and Sport. I was vocal on this issue as the former Minister, Deputy Varadkar, created a dangerous legal precedent of interfering in pension schemes already established through legislation, despite it being claimed to be a private pension scheme, which could not be interfered with, while also being a pension scheme for a company partly owned by the State. The Minister must now introduce fairer protections for defined benefit scheme members.

This amendment has been allowed through, but other amendments on this issue have been conveniently rejected by the Government and thus prevented from ever being considered.

In addition to amendment No. 20, Sinn Féin also submitted a further amendment to ensure deferred members are not impacted disproportionately in any scheme restructuring with an associated appeals mechanism and to enable participation of representatives of deferred members in such appeals. Members of defined benefit pensions have been left vulnerable by this Government and people fear their entire pension could be wiped out, despite the fact they did everything they were meant to do.

The Minister may have rejected our amendments but I call on her to review them and take inspiration from them in resolving this problem through the Bill. Sinn Féin previously outlined the priority order that must be introduced for restructuring of defined benefit schemes that are in deficit. I will restate them. First, a PRSI contributions record sufficient to ensure eligibility for the full State pension should be purchased from the Social Insurance Fund for every scheme member who has not attained such a record. Second, provision should be made for 100% of pensioners' benefits below €12,000, excluding post-retirement increases. Third, active and deferred members under 55 should have disbursed to them the lower of 50% or €6,000 of benefits, or if they are over 55, they should have disbursed to them the lower of 75% or €9,000, excluding post-retirement increases. Fourth, there is a suggestion regarding 75% of pensioner benefits exceeding the initial €12,000 up to a maximum of €30,000, excluding post-retirement increases. Finally, 75% of active and deferred member benefits exceeding the initial sum up to a maximum of €30,000, excluding post-retirement increases, should be the fifth round, as it were, with the sixth round entailing the remaining benefits for pensioners, excluding post-retirement increases. The seventh round would entail active and deferred member remaining benefits, with the eighth round relating to the remaining pensioners and active and deferred members.

This is about treating deferred members fairly and striving to honour the plans they signed up to and lived up to. It is simply not good enough that bad management of these schemes will leave these members in the lurch, with no way of supporting themselves. I ask the Minister to support the amendment and examine the other Sinn Féin amendments relating to deferred members again.

Aer Lingus is a profit-making company and before it was partly privatised, it was a State-run organisation. Many of these deferred members were part of the pension scheme when the company was State-owned. Deferred members are taking the biggest hit with this and it is clear from conversations that I and the Minister have had with deferred members and their representatives that this does not seem right. Many people put money into a pension pot for ten, 20 or 30 years but they are now being pulverised. That is not good enough and the State has a responsibility in this matter. We are repeatedly told that the trustees should take the blame and the expert panel made the recommendations. There is scope to put more money into the pension pot.

I thank the Minister for attending. Everything is interrelated on the Government books. There are off-balance sheet items in the water debate that is expressing itself on the streets outside and now there are 15,000 former employees of a semi-State airline and related businesses who would not have had a problem if they had been full State employees because they would have had a State pension, which is paid from the Central Fund. However, there was a separate pension fund outside the pure State arrangements. When interest rates fall, it benefits the Government and central funding of the country but it is to the disadvantage of pensioners, whether they are existing or deferred pensioners or current employees. This is because one would require more funding to pay the same income level of pensions when interest rates fall. That is the reason the pension deficit went from €344 million in 2011 to €769 million in March 2013, as indicated by the Minister for Transport, Tourism and Sport, Deputy Donohoe. Equities, if they are in the pension fund, will have grown rather than collapsed in that time but the near-cash equivalents - or bonds - have fallen. More of this would hence be required to have a flow in order to pay pensions.

Within this interrelated picture, the Government boasts daily to people in newspapers that the cost of the national debt is falling, thanks to the efforts of the public that is being squeezed, hurt, crunched and steamrolled. That is why more than 80,000 people are on Merrion Square and the other side of the campus. We must be fair and the Minister cannot have her cake and eat it. It is wrong that we are getting e-mails such as that described by Deputies Creighton and Ryan. After 40 years of reasonable expectation and staff cost rationalisation within that time, it is wrong that these people are beaten up and told that the pensions are only worth half or even 25% of what they could reasonably have expected. There is something going very wrong amid the smoke and mirrors of the accounting.

The Minister is an accountant and will understand these questions. Is there a deferred member trustee or a fully retired member trustee? Are there a few of them? Is there a current employee among the trustees? These actuarial experts push things around like trolleys on wheels and then send out fee notes plus VAT at 23% in any event. We need skin in the game, as they say, and that will be when we can get good trustee management and people who understand the issue. It is not rocket science and one day of coaching would teach anybody how to be a trustee. If there is difficulty in understanding, I will do the work pro bono. There is too much jargon and too many multi-syllable words. There are too many lever-arch or ordinary files with too much fudge. It is clearly wrong that 15,000 people are being messed around as they are. The Government must come clean, be fully transparent and spell out exactly what are the intentions. Even if there is a bit of a deficit that is objectively extraneous to the understanding and capabilities of people inside the black box, one might say there is a shortfall of 10% or 15%; that can be shared fairly, with a simple explanation of what is happening.

There are people going around with metaphorical bits of string, Sellotape, blindfolds, smoke and mirrors in labyrinthine corridors. That does not do it for me. One could put the plight of these 15,000 people on a wall and show the age profiles by decile, along with who contributed the different amounts. We should remember that there were employee contributions and they did not all come from employers. There was rationalisation and people were told that there had to be improvements in operating results, profit-and-loss accounts and balance sheets. When elements are moved off balance sheet, what were employees are changed to deferred pensioners. That goes off the balance sheet and profit-and-loss accounts into the trustee balance sheet and actuarial funding equations.

It is smoke and mirrors. It is a practice we must put a stop to. We can start doing so by taking the iron-clad brake of the whip system from the Government parties. It already has a majority, so does it not trust itself to be able to debate the pros and cons of aspects of legislation needed for the circumstances in which the country finds itself?

Unemployment is down by 100,000 and jobs are up by 81,000 but what about the 500,000 who have emigrated? Somebody said to me last Friday that the rate of unemployment is falling but I said my second son is not in that statistic. We just saw him off earlier this morning for two years. That is the second one. The atmosphere here is not even good for people of that age. They are asked to fill out an income tax form 11, which is 23 pages. God almighty. It is a simple thing. Where is the simplicity? Even with property tax and water charges, a new bureaucracy is born. People have to pay them out of their incomes, so if we got a good fix on the incomes-----

Deputy Mathews, you are moving slightly away from the amendments.

I am wrapping these amendments up into the big picture.

I am showing where the connectivity is. I am offering to help coach the trustees of the scheme. There are a few thoughts. Let us get honest, let us get real and let us shine clear light on this. We are fighting this ship coming down the slipway and we cannot stop it. The Minister will stand in front of the microphones and say that we have achieved such a fiscal turnaround, the interest rates are down. All the interest rates are down because the Americans are churning money off the printing presses. Draghi says he will do that, so the market fund managers think he will and behave accordingly. We need a bit of grown up thinking.

I am sorry if I sound a bit cranky but maybe I am. We are four years into this and the facts have not changed. Diarmuid O'Flynn, who was nearly elected as an MEP, is on Merrion Square today. He is inviting people to the Ballyhea protest march on 28 December, which is a Sunday. We should all be there because that is what Draghi will pay attention to. There is €25 billion of misplaced losses. We have nothing to do with them and that is why Irish Water is trying to squeeze, steamroll and crunch the people to pay €10 billion to get the reservoirs, the treatment plants and the pipes working. When they are working, then maybe bring in meters if we want a bit of conservation.

That is very interesting, Deputy-----

It is still all interconnected. Is it not?

-----but we are on the Social Welfare Bill 2014.

It is still all interconnected.

If there are others who want to speak-----

I know that. I am seeking a thumbs up. Deputy Brendan Ryan made a very good contribution and Deputy Dessie Ellis made an excellent one. I am just trying to simplify it. Does anybody want me to stop? Those in favour say "Tá" and those against say "Níl".

The Chair would like you to talk about the Bill. If you have made your contribution, I will call on the Minister to reply.

In regard to the points made by Deputy Brendan Ryan, he expressed his concerns about the different people, including the 5,000 people at work who are affected by the different changes and who have decisions to make on the changes proposed by the company and the trustees in respect of the IASS pension fund. I refer also to a very important matter Deputy Clare Daly raised the last day when she made her contribution. Deputy Brendan Ryan went into the same area, so I will address those two points.

In regard to the actions of the trustees of the Irish Airlines Superannuation Scheme, the Pensions Authority has the power under section 18 of the Pensions Act 1990 to investigate the state or conduct of a pension scheme. The Pensions Authority has wide-reaching powers of investigations in regard to trustees. Under section 18 of the Pensions Act, the authority may authorise in writing such and so many persons it considers necessary to be authorised persons to inspect or to investigate on its behalf the state and conduct of an occupational pension scheme. For clarity, I wanted to say that in regard to Deputy Ryan's comments.

The powers conferred on the authority by section 18 of the Act are extensive. They include the power to require persons to provide such information, explanation and documents as may be specified in a notice to enter premises for the purposes of inspecting, copying and-or removing books, documents and records and the power to obtain a warrant from the District Court in respect of entering upon a person's private dwelling.

Section 18(5) makes it an offence for a person inter alia to obstruct willfully an authorised person in the exercise of his or her powers and the penalties attaching to that and the power of the authority to conduct an investigation under section 18. It cannot be exercised lightly and it must be exercised with a view to the possibility of the authority either initiating a criminal prosecution or invoking one or other of its powers.

This is all passing the buck.

Two Deputies made quite valid comments. I believe I am answering those comments. Other Deputies made valid comments also and I am going to try to answer them. The power of the authority can be exercised.

I ask Deputies Ryan and Daly to formally bring any concerns that either of them have in regard to the conduct of the trustees to the attention of the Pensions Authority. I think Deputy Broughan or Deputy Shortall mentioned the very significant fall in the value of what was once a very large pension fund and the enormous deficit that opened up as a consequence of that falling value. I think everybody has recognised that.

I refer to the amendment put forward by Deputy Ó Snodaigh. Essentially, that amendment put in an alternative wind-up priority order. It gives first priority to awarding the full State pension. The pension fund legislation deals with the distribution of the occupational defined benefit pension scheme funds. There is actually no direct connection between the contributions made to benefits received from an occupational defined benefit scheme in the private sector and an actual payment of a State pension. I said previously that the provisions contained in section 48 of the Pensions Act, which set out how the assets of a scheme are distributed and the wind up of a scheme, have no impact on any entitlement to the State pension or the PRSI contributory system. The contributory principle, where there is a direct link between social insurance contributions made and resulting entitlement to a varying range of benefits and pensions that are payable as a right, is an underlying feature of principle of Ireland's pay related social insurance system.

The State pension contributory is paid from the Social Insurance Fund to any individual from the age of 66 who meets the qualifying criteria and has sufficient contribution. The rate of State pension payable is linked to the overall-----

On a point of order, the Minister is addressing amendment No. 23 which is not in the group we are discussing.

I am addressing the specific Sinn Féin amendment in the name of Deputy Ó Snodaigh.

That is amendment No. 23. What number is it?

It is amendment No. 23.

That is not in the group.

Under the rules of the House, Deputy Ellis is entitled to speak about an amendment which has been ruled out of order and I am entitled to comment on the point he raised.

It is on the clár. It has not been ruled out of order.

I am referring to the one to which Deputy Ellis referred.

The Deputies seem very reluctant to allow anybody's points to be addressed. That is a pity.

They will come up later.

I am aware of the issues arising around the IAS Scheme and recently met, as have several people here, with representatives of the deferred members’ groups. They articulated very clearly their concerns arising from proposals to address the significant deficit which I referred to earlier that has unfortunately arisen in this pension fund. That is the source of the difficulties and the problems that the 5,000 retired members, the 5,000 people at work and the 5,000 deferred members have difficulty consequential upon that enormous deficit. That is the cause of the problem. Deputy Mathews acknowledged that in his contribution and indicated that were he training trustees, he would perhaps give them better advice.

The State should make up the difference in the deficit.

I do not propose to accept the amendments in the names of Deputies Willie O’Dea, Róisín Shortall, Joan Collins, Aengus Ó Snodaigh, Thomas P. Broughan and Clare Daly. They broadly entail placing a debt or obligation on employers to secure or guarantee a level of scheme funding, changing the manner in which the assets of the pension scheme are distributed in the event of the wind-up of a pension scheme and provision of an appeals mechanism for scheme members where trustees have decided upon reduced benefits for members. Defined benefit pension schemes in Ireland are set up and maintained by employers on a voluntary basis. There has never been a statutory obligation on employers under Irish law to contribute to their pension scheme. Rather, when a defined benefit scheme is set up, the level of employer and employee contributions is agreed and established in contract in each scheme’s trust deeds and rules. The trust deeds and rules differ from scheme to scheme, as I am sure Deputy Mathews is well aware. As with any contractual situation, they reflect the parameters on the level of obligation of the parties involved. This is an issue which has been considered on several occasions over the past decade.

The funding standard expert group of the Pensions Authority recommended against the introduction of a debt on employers in 2004 and 2005. They saw it as introducing a retrospective cost on employers and feared that it would undermine the voluntary basis on which defined benefit schemes were set up. The Green Paper on pensions, which was published in 2007 by the previous Government, considered "debt on employer" and referred to the recommendations of the Pensions Authority in 2004 and 2005. Following the public consultation process on the Green Paper, the national pensions framework was published by the previous Government in 2010 and did not include any provision for a debt on the employer. While the Organisation for Economic Co-operation and Development, OECD, review of the Irish pensions system, which was published last year, considered the issue of the debt on the employer, its findings are not prescriptive. In tabling its views the OECD advised:

In considering these alternatives, it should be kept in mind that each of the national schemes and reforms discussed was adopted in a specific national economic, social and political setting. There is no blueprint for reform which Ireland could take off-the-shelf and implement directly. Any solution has to fit the Irish situation.

A debt on an employer would require employers to account for any deficit in the pension scheme in its annual accounts following changes to accounting requirements as set out in financial reporting standard, FRS, 17. Notwithstanding the outcome of previous considerations of this issue, very serious consideration was given in developing the measures contained in the Social Welfare and Pensions (No. 2) Act 2013 to imposing a statutory obligation on employers to secure scheme level funding. I recall having very detailed discussions on this with quite a few people present in the House here today.

Internationally, the structures needed to administer such arrangements are complex and costly. It has resulted in increased and detailed State involvement in sponsoring employers’ business decisions. Given the very small proportion of defined benefit schemes in Ireland, linked to employers who have a credit rating or other reliably accurate and consistent measure of solvency, it is not the case that a workable "anti-avoidance framework" to "selectively apply" a debt on an employer is easily achievable.

I suggested previously that many schemes are making great efforts to ensure their ongoing viability. Many have been very successful in doing that. Employers and members have often made significant financial contributions over and above those required by their particular trust rules. This process is generally managed through dialogue between trustees, employers and members where efforts are made to reach agreement regarding the steps that have to be taken to secure scheme viability, which may include a mixture of measures such as those outlined in several contributions today.

I do not propose to accept the amendments put forward but in response to the points raised by Deputy Ryan and just as we were finishing on the previous day by Deputy Clare Daly, I want to draw attention to the powers of the Pensions Authority in respect of the matters they raised.

The strength of feeling expressed last week and here today about the myriad problems arising in respect of current employees and current and deferred benefit pensioners within the IASS highlights and underlines the hotch potch of policy underpinning pension policy in this country. I suppose it is because of the failure of successive governments to take responsibility for this area and to introduce a coherent pensions framework that we find ourselves in this situation in respect of the IASS and increasingly in respect of so many other schemes that have run into difficulty.

In recent years the State has been spending in the region of €3 billion a year on its principal pension policy, which is to provide a facility for tax relief for people with private pensions. It has been estimated that some 80% of that €3 billion in tax expenditure has been to the benefit of 20% of the highest earners in this country. That is at the root of all the problems associated with pensions here. We have a pensions policy that is highly inequitable, very expensive and benefits the better off. A great many people with very little pension provision for themselves or no pension provision at all are subsidising the better off who have pension pots up to €5 million and beyond in some cases. That is a highly inequitable system and that needs to be tackled.

I am sorry the Minister has left the House because I find her response totally unconvincing. Every Deputy has received numerous e-mails, telephone calls, letters and correspondence about the flawed proposal to deal with the IASS pension scheme, particularly from deferred pensioners. The scheme has been set up in such a way that they are taking the brunt of the hit and small wonder because they had absolutely no hand, act or part in deciding how the chips were going to fall. That is wrong. It is immoral. I listened carefully to Deputy Ryan’s contribution.

He suggested that an extra contribution of €50 million from the companies that are contributing would solve this problem. I am sure he has done his research and that what he is saying is correct. It is a very small amount of money in the context of the sums we are talking about here. The Government should have made a better and more strenuous effort to sort out this problem before the Minister for Transport, Tourism and Sport rushed out to sign the order and thereby consign these people to their fates. If the gap is as narrow as Deputy Ryan has suggested, surely it is not beyond the capacity of the Government to get it solved.

Two of the amendments, Nos. 19 and 20, are in my name. Amendment No. 19 proposes that a solvent and financially healthy company operating a defined benefit pension scheme should not be allowed to close that scheme until it has reached a level of 90% funding. That would protect the workers and the future deferred pensioners, etc. We are also saying there should be an appeal mechanism for the trustees. The Tánaiste mentioned that the matter can be referred to the Pensions Authority. Did she refer this matter to the authority? How many of these cases have been referred to the authority? I believe the authority will not consider these cases other than in the most extreme circumstances. In light of all the stories in the public domain about the mismanagement of pension funds by trustees in this case, not to mention all the allegations about conflicts of interest, etc., I am at a loss to know why the Tánaiste did not refer the conduct of those trustees to the authority. I ask the Tánaiste to give the House an assurance that the Government will bring these matters to the attention of the Pensions Authority immediately.

I found the Tánaiste's response wholly inadequate. We have to restate the background to this matter. I refer to the imminent erosion of the living standards of existing pensioners and the threat that the same thing will happen to deferred pensioners and present members of the scheme in the future. The Government has attempted to portray this as a problem of the trustees, the company and the members. There has been a suggestion that it has nothing to do with the Government itself. That is completely wrong. The trustees adopted a "freeze and de-risk " strategy at the behest of the employers. We should remember that one of these employers - the Dublin Aviation Authority - is 100% owned by the State. At key times in the history of Aer Lingus, it was fully owned by the State. It is still 25% owned by the State. We have an ability to curtail the antics of these companies. That is what these amendments seek to do.

Deputy Ryan suggested that the companies have abdicated their responsibilities. He claimed they have acted outside the law. If that is the case, the behaviour of the companies has profound implications. In such circumstances, why has the Deputy not referred the matter to the Garda? If he really believed it was the case that the companies are responsible, he would be supporting these amendments, which seek to ensure solvent companies that have a responsibility live up to that responsibility. These issues should have been examined before the Minister for Transport, Tourism and Sport signed the order.

I noted the Tánaiste's comments about the powers of the Pensions Authority. I fully intend to pass information I have about certain antics in this scheme to the Pensions Authority, which has been in contact with me. Against that background, surely the Minister for Transport, Tourism and Sport would have waited before he signed the order and surely we have a responsibility now to implement these amendments, which would seek to curtail the antics of companies, one of which is meeting as we speak. The vote is probably over now. I refer to the Aer Lingus extraordinary general meeting, which was on at 2 o'clock. I do not doubt that it has sealed its approval for this measure. This is the 11th hour. We need to move on this.

I would like to clarify that I said in my contribution that the behaviour of the trustees could possibly have been outside the law. I support Deputy O'Dea's call for the Tánaiste to ask the Pensions Authority to examine the behaviour of the trustees in this case. I ask the Tánaiste to give serious consideration to this.

I welcome Deputy Clare Daly's confirmation that she intends to bring her concerns and her information to the Pensions Authority. That would be helpful. She might have more information on the matter than I have. In fairness to the Tánaiste, she has covered a lot of the ground. She has gone over the issue and the history of the last ten years. In light of the uncertainty about the overall impact and potential for unintended consequences of applying debt on the employer, selectively or otherwise, it is not proposed to make changes of this nature. The Tánaiste has certainly looked at elements of this. She has proposed a package of measures that would assist pension schemes and probably nurse them back into sustainable funding positions. I do not intend to revisit everything the Tánaiste said in the last few minutes. I have nothing further to add to what she said. I do not propose to accept these amendments.

It is disappointing that the Tánaiste did not deem it necessary to stay in the House to discuss these amendments.

In fairness to the Tánaiste, she has spent 13 hours on the Social Welfare Bill through this-----

She has spent very little time on this important issue, which affects a huge number of people. That is the difficulty.

She has been here for over 13 hours.

It affects 15,000 people.

The Deputy should be fair to the Tánaiste.

Excuse me. I have the floor.

She should have some sense of fairness, at least.

I ask the Minister of State to allow Deputy Shortall to continue.

Given that this issue affects 15,000 people in the Irish airlines superannuation scheme, the least the Tánaiste could have done was stay to engage in some kind of meaningful debate about what is going on.

I spoke earlier about the unfair pensions regime in this country. The Government promised to reform it but is has backed off on those reforms. We saw that happening last year. The Labour Party element of the Government, in particular, promised to introduce serious reform, but the Government has backed off on that. The pension levy was increased as a direct result of the shortfall in the funding that was expected to be raised from pension changes. Many people on very small private pensions have been paying a pension levy of 0.6%. This makes a huge difference to their pension benefits. The shortfall I mentioned, which resulted from the Government's failure to introduce the promised reforms last year, meant that the pension levy had to be hiked up by a further 0.15% for this year and next year. That is further compounding the unfairness of the pensions regime.

The other major pensions problem in this country is the regulatory framework that surrounds pensions. As a result of the Social Welfare and Pensions Act 2009, which made provision for the priorities in pension schemes to be reordered, existing pensioners - those who are in payment - stand to lose between 10% and 20% of their pensions. Rather than addressing this issue by making savings at the top end, where vast pension pots are being subsidised by everybody in this country, we are overseeing a situation in which people on small private pensions are losing substantial portions of those pensions. The Act that was introduced in 2009 by the Fianna Fáil-led Government gives the green light to solvent companies to walk away from their pension commitments. The current Government cannot explain its position by referring to what its predecessor did because the provision in question was copperfastened in December of last year by the Social Welfare and Pensions (No. 2) Act 2013. The Government is telling companies that have very healthy balance sheets, are doing very well and have very strong outlooks for the future that it is happy for them to walk away from their pension commitments and the undertakings they gave to their workers and pensioners.

I regret the Tánaiste is not in the Chamber, but I must pose my next question anyway. On what basis does the Government believe it is acceptable for a solvent company to walk away from its pension commitments, other than being prepared to abandon workers and pensioners who understood they had certain rights? The Government is saying it is okay to forget about them because it will not hold the companies to their commitments. It is an incredible position for the Government to adopt, especially its Labour element.

Earlier, the Minister for Transport, Tourism and Sport, Deputy Donohoe, spoke about feeling the pensioners' pain. That kind of bleeding heart stuff is of no benefit to those who are affected. The Minister and the Tánaiste assert that, somehow, everything is someone else's fault and has nothing to do with them. An attempt is being made by Ministers to hide behind the trustees of the Irish airlines superannuation scheme, IASS, and to claim the latter are at fault. Whatever about this applying in a private company that is far removed from the Government, the Government should set a good example in this case and set down a protective framework for what is a basic element of a worker's rights, namely, the right to a decent pension, especially after having paid into that pension for 35, 40 or more years. This is the situation obtaining with the IASS.

In spite of having owned Aer Lingus until its privatisation and still possessing a 25% shareholding in same and despite the Dublin Airport Authority, DAA, being a semi-State commercial company, the Government has refused to play any role in this debacle, leaving it to the company and the trustees as if the situation had nothing to do with it. The Government has the power to act. It should have told the companies that it was not acceptable for companies that were solvent and doing well to renege on their commitments to their pensioners and employees. The Government should have stated clearly that a company in State ownership should not behave in that way and undermine workers and pensioners' rights. We need the Government to show leadership, not to hide behind the trustees or companies.

There was a protest outside Aer Lingus's EGM this afternoon, particularly by aggrieved deferred pensioners. Can the House imagine if public sector workers, for example teachers, were told that, from today on, they would lose between 40% and 60% of their pensions? Whatever about the protests on the streets today, they would be far larger if an arbitrary decision was taken to slash pensions without any notice or justification. There would be uproar, but that is effectively what the Government is supporting the companies in doing. Having paid into pension schemes and received written contracts and undertakings when they took early retirement packages, people had a legitimate expectation of having their pension benefits preserved, yet the Government is now saying it is okay for State companies to renege on those undertakings. This is not acceptable by any standard.

It was wholly inadequate of the Tánaiste to tell Deputy Clare Daly to bring the serious issues that she raised last week to the Pensions Authority. Serious allegations had been made. The Tánaiste has had a week to look into, verify and take action on them. It is disappointing that she has done nothing. She has passed the buck and told Deputy Clare Daly to do something if she knows about it. When the Deputy brought the matter to the Tánaiste last week, the latter should have acted on it. This is just more washing of hands.

The first amendment in this group requires a full review to be carried out of the implications for the public purse of current Government policy on private pension schemes. If we are telling companies that it is okay for them to renege on their pension commitments, it will have implications for the State's non-contributory pension. The State seems to be saying that it is okay for private companies to do this and that the State will pick up the tab if people end up claiming non-contributory pensions. We need to review this, as it is not acceptable.

Under the principal amendment in the group, a company would not be allowed to close a pension scheme unless it had met 90% of the funding standard. By right, a scheme should meet 100%, given people's contracts, but 90% is a reasonable standard. No company that is solvent and trading successfully should be allowed to close a scheme without ensuring that its members get 90% of what they were promised.

Another amendment relates to an appeals mechanism. Many decisions have been taken arbitrarily, with the Minister, Deputy Donohoe, signing the order on foot of the expert panel's recommendations. Although he stated that he understood how deeply worried people were, he failed to take any action to address the inequality that was being delivered to people.

What the Government is doing with the IASS means that, while its existing pensioners stand to lose out, its deferred pensioners in particular stand to lose a significant amount of what they understood were their retirement benefits. The Minister of State and anyone with any sense know that it is wrong and unfair to treat people in this way. That the Government, a central player, believes it to be all right to sing dumb when people's rights are clearly being trampled is beyond understanding.

In spite of the sympathetic noises from the ministerial benches and backbenches, if people believe in the rights of the workers involved in the IASS, they should stand up for them and support this amendment, which would ensure those rights were upheld.

Amendment put and declared lost.

Amendment No. 19 has already been discussed with amendment No. 18. Will Deputy O'Dea be pressing the amendment?

Will we not get a chance to contribute on our amendments again?

No. These amendments are being discussed together.

Why would Deputy Shortall have unlimited time when the rest of us would not?

Deputy Shortall moved the first amendment on the list.

In a grouping.

No. She addressed her own amendment specifically.

We took amendments Nos. 18 to 21, inclusive-----

Amendment No. 18 was in Deputy Shortall's name.

-----25, 27 and 28 together.

Is the Leas-Cheann Comhairle saying that I can come back in further down the list?

No. The Ceann Comhairle-----

Then I will sum up on this grouping.

The Ceann Comhairle indicated the grouping of amendments before he left. I will read it out again if that will help the Deputy.

I know which amendments are included in the grouping. I am unclear as to why, given that I tabled several of these amendments, I am not being given another opportunity to speak to them.

I am operating according to Standing Orders.

Do Standing Orders state that no matter how many Deputies are associated with an amendment, only one person can sum up?

One Member may sum up and every other speaker may make an initial contribution and then a second contribution of two minutes. Only the proposer may make a third contribution in the form of a summing up.

My point is that we all are proposers.

Standing Orders are clear on this matter. I call Deputy O'Dea to move amendment No. 19.

I move amendment No. 19:

In page 4, between lines 21 and 22, to insert the following:

“Amendment of Pensions Act 1990

4. The Pensions Act 1990 is amended by inserting a new section 48A as follows:

"48A. A solvent firm shall not be allowed to close a defined benefit pension scheme except where the scheme has reached a minimum 90 per cent funding standard.".".

Amendment put:
The Dáil divided: Tá, 45; Níl, 81.

  • Adams, Gerry.
  • Broughan, Thomas P.
  • Calleary, Dara.
  • Collins, Joan.
  • Collins, Niall.
  • Colreavy, Michael.
  • Cowen, Barry.
  • Daly, Clare.
  • Doherty, Pearse.
  • Donnelly, Stephen S.
  • Ellis, Dessie.
  • Ferris, Martin.
  • Fitzmaurice, Michael.
  • Flanagan, Terence.
  • Fleming, Sean.
  • Grealish, Noel.
  • Halligan, John.
  • Healy-Rae, Michael.
  • Keaveney, Colm.
  • Mac Lochlainn, Pádraig.
  • McConalogue, Charlie.
  • McGrath, Finian.
  • McGrath, Mattie.
  • McGrath, Michael.
  • McGuinness, John.
  • McLellan, Sandra.
  • Martin, Micheál.
  • Mathews, Peter.
  • Moynihan, Michael.
  • Murphy, Catherine.
  • Ó Caoláin, Caoimhghín.
  • Ó Cuív, Éamon.
  • Ó Fearghaíl, Seán.
  • Ó Snodaigh, Aengus.
  • O'Brien, Jonathan.
  • O'Dea, Willie.
  • O'Sullivan, Maureen.
  • Ross, Shane.
  • Shortall, Róisín.
  • Smith, Brendan.
  • Stanley, Brian.
  • Timmins, Billy.
  • Tóibín, Peadar.
  • Troy, Robert.
  • Wallace, Mick.

Níl

  • Bannon, James.
  • Barry, Tom.
  • Breen, Pat.
  • Bruton, Richard.
  • Burton, Joan.
  • Butler, Ray.
  • Buttimer, Jerry.
  • Byrne, Catherine.
  • Byrne, Eric.
  • Cannon, Ciarán.
  • Carey, Joe.
  • Coffey, Paudie.
  • Collins, Áine.
  • Conaghan, Michael.
  • Conlan, Seán.
  • Connaughton, Paul J.
  • Conway, Ciara.
  • Coonan, Noel.
  • Creed, Michael.
  • Daly, Jim.
  • Deasy, John.
  • Deenihan, Jimmy.
  • Deering, Pat.
  • Doherty, Regina.
  • Donohoe, Paschal.
  • Dowds, Robert.
  • Doyle, Andrew.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Feighan, Frank.
  • Fitzpatrick, Peter.
  • Griffin, Brendan.
  • Harrington, Noel.
  • Harris, Simon.
  • Hayes, Tom.
  • Heydon, Martin.
  • Howlin, Brendan.
  • Humphreys, Heather.
  • Humphreys, Kevin.
  • Keating, Derek.
  • Kehoe, Paul.
  • Kelly, Alan.
  • Kenny, Seán.
  • Kyne, Seán.
  • Lynch, Kathleen.
  • Lyons, John.
  • McEntee, Helen.
  • McFadden, Gabrielle.
  • McGinley, Dinny.
  • McHugh, Joe.
  • Maloney, Eamonn.
  • Mitchell, Olivia.
  • Mitchell O'Connor, Mary.
  • Mulherin, Michelle.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Neville, Dan.
  • Nolan, Derek.
  • O'Donnell, Kieran.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • O'Reilly, Joe.
  • O'Sullivan, Jan.
  • Perry, John.
  • Phelan, Ann.
  • Phelan, John Paul.
  • Quinn, Ruairí.
  • Rabbitte, Pat.
  • Reilly, James.
  • Ring, Michael.
  • Ryan, Brendan.
  • Shatter, Alan.
  • Spring, Arthur.
  • Stagg, Emmet.
  • Stanton, David.
  • Tuffy, Joanna.
  • Twomey, Liam.
  • Varadkar, Leo.
  • Wall, Jack.
  • Walsh, Brian.
Tellers: Tá, Deputies Willie O'Dea and Michael Moynihan; Níl, Deputies Paul Kehoe and Emmet Stagg.
Amendment declared lost.

I move amendment No. 20:

In page 4, between lines 21 and 22, to insert the following:

“Amendment of Pensions Act 1990

4. The Pensions Act 1990 is amended by inserting a new section 48A as follows:

48A. An appeals mechanism for pension scheme members shall be put in place where trustees have decided upon reduced benefits for members, and such appeals mechanism shall ensure that any category of such pension scheme members have not been unfairly treated in any restructuring arrangement.”.”.

Amendment put and declared lost.

I move amendment No. 21:

In page 4, between lines 21 and 22, to insert the following:

“Amendment of Pensions Act 1990

4. The Pensions Act 1990 is amended by inserting a new section 48A as follows:

48A. Trustees shall take into account pensionable service, age and recognition of variations between pension scheme members in respect of contributions of beneficiaries in a company in the allocation of rights.”.”.

Amendment put:
The Dáil divided: Tá, 47; Níl, 81.

  • Adams, Gerry.
  • Broughan, Thomas P.
  • Calleary, Dara.
  • Collins, Joan.
  • Collins, Niall.
  • Colreavy, Michael.
  • Cowen, Barry.
  • Creighton, Lucinda.
  • Daly, Clare.
  • Doherty, Pearse.
  • Donnelly, Stephen S.
  • Ellis, Dessie.
  • Ferris, Martin.
  • Fitzmaurice, Michael.
  • Flanagan, Terence.
  • Fleming, Sean.
  • Grealish, Noel.
  • Halligan, John.
  • Healy, Seamus.
  • Healy-Rae, Michael.
  • Keaveney, Colm.
  • Mac Lochlainn, Pádraig.
  • McConalogue, Charlie.
  • McGrath, Finian.
  • McGrath, Mattie.
  • McGrath, Michael.
  • McGuinness, John.
  • McLellan, Sandra.
  • Martin, Micheál.
  • Mathews, Peter.
  • Moynihan, Michael.
  • Murphy, Catherine.
  • Ó Caoláin, Caoimhghín.
  • Ó Cuív, Éamon.
  • Ó Fearghaíl, Seán.
  • Ó Snodaigh, Aengus.
  • O'Brien, Jonathan.
  • O'Dea, Willie.
  • O'Sullivan, Maureen.
  • Ross, Shane.
  • Shortall, Róisín.
  • Smith, Brendan.
  • Stanley, Brian.
  • Timmins, Billy.
  • Tóibín, Peadar.
  • Troy, Robert.
  • Wallace, Mick.

Níl

  • Bannon, James.
  • Barry, Tom.
  • Breen, Pat.
  • Bruton, Richard.
  • Burton, Joan.
  • Butler, Ray.
  • Buttimer, Jerry.
  • Byrne, Catherine.
  • Byrne, Eric.
  • Cannon, Ciarán.
  • Carey, Joe.
  • Coffey, Paudie.
  • Collins, Áine.
  • Conaghan, Michael.
  • Conlan, Seán.
  • Connaughton, Paul J.
  • Conway, Ciara.
  • Coonan, Noel.
  • Creed, Michael.
  • Daly, Jim.
  • Deasy, John.
  • Deenihan, Jimmy.
  • Deering, Pat.
  • Doherty, Regina.
  • Donohoe, Paschal.
  • Dowds, Robert.
  • Doyle, Andrew.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Feighan, Frank.
  • Fitzpatrick, Peter.
  • Griffin, Brendan.
  • Harrington, Noel.
  • Harris, Simon.
  • Hayes, Tom.
  • Heydon, Martin.
  • Howlin, Brendan.
  • Humphreys, Heather.
  • Humphreys, Kevin.
  • Keating, Derek.
  • Kehoe, Paul.
  • Kelly, Alan.
  • Kenny, Seán.
  • Kyne, Seán.
  • Lynch, Kathleen.
  • Lyons, John.
  • McEntee, Helen.
  • McFadden, Gabrielle.
  • McGinley, Dinny.
  • McHugh, Joe.
  • Maloney, Eamonn.
  • Mitchell, Olivia.
  • Mitchell O'Connor, Mary.
  • Mulherin, Michelle.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Neville, Dan.
  • Nolan, Derek.
  • O'Donnell, Kieran.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • O'Reilly, Joe.
  • O'Sullivan, Jan.
  • Perry, John.
  • Phelan, Ann.
  • Phelan, John Paul.
  • Quinn, Ruairí.
  • Rabbitte, Pat.
  • Reilly, James.
  • Ring, Michael.
  • Ryan, Brendan.
  • Shatter, Alan.
  • Spring, Arthur.
  • Stagg, Emmet.
  • Stanton, David.
  • Tuffy, Joanna.
  • Twomey, Liam.
  • Varadkar, Leo.
  • Wall, Jack.
  • Walsh, Brian.
Tellers: Tá, Deputies Joan Collins and Clare Daly; Níl, Deputies Paul Kehoe and Emmet Stagg.
Amendment declared lost.

I move amendment No. 22:

In page 4, between lines 21 and 22, to insert the following:

“Amendment of Pensions Act 1990

4. The Pensions Act 1990 is amended by the insertion of the following section after section 48A (inserted by section 10 of the Social Welfare and Pensions Act 2013):

“Payment of moneys by Minister for Finance in respect of liabilities accruing under certain relevant schemes

48B. (1) The Minister for Finance may, at the request of the Minister, following consultation with the Minister for Public Expenditure and Reform, pay moneys to an approved person for the purpose of the discharge by the approved person of the liabilities of an eligible pension scheme, referred to in paragraph (b) of the definition of eligible pension scheme.

(2) The Minister for Finance may, after consultation with the Minister for Public Expenditure and Reform, authorise a person to be an approved person for the purposes of this section.

(3) The moneys referred to in subsection (1) that are required by the Minister for Finance for the making of a payment under that subsection shall be paid out of the Central Fund or the growing produce thereof.

(4) In this section—

‘approved person’ means a person authorised under subsection (2);

‘eligible pension scheme’ means a relevant scheme where the date of the winding up of the scheme is on or after 25 January 2007 and

before 25 December 2013 and in respect of which—

(a) the employer participating in the relevant scheme is, or where more than one employer participates in such scheme, all of the employers participating in the scheme are, at the date of the winding up insolvent for the purposes of the Protection of Employees (Employers’ Insolvency) Act 1984, and

(b) the resources of the relevant scheme are not sufficient to discharge in whole or in part, the liabilities of the scheme in respect of—

(i) 50 per cent of the benefits specified in paragraph 1 of the Third Schedule to or in respect of those persons who, at the date of the winding up of the scheme, were within the categories referred to in that paragraph, to the extent that those benefits have not already been discharged, and

(ii) 50 per cent of the benefits specified in paragraphs 2, 3 and 4 of the Third Schedule to or in respect of those members of the scheme who, at the date of the winding up of the scheme, were within the categories referred to in those paragraphs, to the extent that those benefits have not already been discharged.

(5) A reference to ‘effective date of the certificate’ in the Third Schedule shall, insofar as it relates to an eligible pension scheme, be construed as a reference to the date of the winding up of the eligible pension scheme concerned, with any necessary modifications.".".

Amendment agreed to.

Amendment No. 23 is out of order.

Amendment No. 23 not moved.

Amendments Nos. 24 and 26, in the names of Deputies O'Dea, Collins and Daly, are related and are to be discussed together.

I move amendment No. 24:

In page 4, between lines 21 and 22, to insert the following:

“Amendment of Pensions Act 1990

4. The Pensions Act 1990 is amended in section 50 by inserting the following after subsection (1D) (inserted by the Social Welfare and Pensions (No. 2) Act 2013) as follows:

“(1E) A reduction in the preserved benefits for members with accrued service in excess of 20 years referred to in subsection (1B) shall, subject to subsection (1F), be made as follows:

(a) where the annual amount is €12,000 or less, no reduction shall be made from such annual amount;

(b) where the annual amount is greater than €12,000 and is less than €60,000, the reduction in such annual amount shall not exceed 10 per cent;

(c) where the annual amount is €60,000 or more, the reduction in such annual amount shall not exceed 20 per cent.

(1F) Where—

(a) the reduction referred to in subsection (1E) would result in the annual amount being reduced to less than €12,000, that reduction shall operate to reduce such annual amount to €12,000, and

(b) the annual amount is €60,000 or more and the reduction referred to in subsection (1E) would result in such annual amount being reduced to less than €54,000, that reduction shall operate to reduce such annual amount to €54,000.".".

This amendment advocates an alternative distribution system that I previously proposed and put forward by way of a Private Members' Bill. The Minister has introduced her own system, but since I believe it is less favourable than the one I am proposing, I wish to propose mine again. We have already discussed it at some length.

I support the amendments.

Does Deputy Daly wish to contribute?

I certainly do. I have to make up for the time the Leas-Cheann Comhairle denied me earlier.

Under Standing Orders.

Absolutely. I love these Standing Orders; they are great.

This gets to the heart of the issues concerning the sharing of the pain and the impact on pensioners' living standards. The problem is that we, particularly Government Deputies, have put forward the idea that there is a problem with the scheme as if it were somehow preordained or beyond our control. The issues we have raised have not been dealt with and there has been no answer to a question as to why there is a problem with the funding of the scheme. On the one hand, the problems relate to the antics of the company which allows people to leave. Those concerned invested in the pension scheme when they left but new employees got to join a different pension scheme, a defined contribution scheme. If no new staff are coming in and replenishing the funds in the IAS scheme, there is clearly an actuarial problem. The decision in this regard was made when the company was in State ownership. The issues and problems with the trustees have been mentioned. This absolutely must be investigated.

There has been talk about the vote at the EGM in terms of Aer Lingus. However, I do not believe we have focused sufficiently on the DAA side at all. Many of the Aer Lingus staff who voted on the system were not members of the pension scheme at all. They were members of SIPTU but not of the IAS scheme, yet existing pensioners and deferred pensioners were denied a voice in the same process. Despite this, the Government has sought to rely on the expert panel report to justify some of the cuts being made. These amendments are seeking to change the order to protect and minimise the impact of the cuts on the various pensioner groups. They are a necessity if pensioners' living standards are to be protected.

There has not been enough discussion on the DAA side of the equation. The DAA is getting half the amount that Aer Lingus members are getting in terms of an investment to solve the problem with the scheme. However, the DAA also has significant legal problems with the way in which it put forward the idea on the Aer Rianta supplemental superannuation scheme, which it believed it would be able to wind up as part of the proposal. Now, however, it has been told it actually has to freeze it. The point I am trying to make is that there is no acceptance of the expert panel's proposal and the solutions put forward by any of the members' unions in the DAA at the moment. Therefore, there is not an agreement, leaving aside the points on the existing pensioner groups who did not have a voice in the first place.

Let me put this in context. What we are talking about doing is protecting people from draconian cuts and changing the order. Let me deal with an e-mail I was sent by a constituent. The constituent was responding to information I got for him from the Minister for Finance on income tax paid and how that income tax affects various groups. The point he was making is that the tax burden is markedly benign as income rises over €150,000. He referred to a group of people who earn over €11 billion between them, suggesting no income group earning above €100,000, up to multiple millions of euro, pays more than an additional 4.7% in the euro. As income rises, therefore, we have a very regressive tax scheme. The constituent made the point that he worked for Aer Lingus for 40 years and that when the Government was the sole or majority shareholder and employer, the Minister's contribution to the defined benefit underfunding crisis was actually to damage further the fund with a levy that reduces it and pensioners' entitlements accordingly. Obviously, the vote at the EGM that took place today was to try to reduce that even further. Pensioners were excluded from the process and the communication roadshow that took place on the schemes. They were completely and utterly excluded from the expert panel.

No moneys have been put in to defray the costs from them. They are the only group, in that €175 million of their pension capital is being taken from them. This represents a six-week cut in their income from the start of next year. Of course, they have no right to bring these issues to the Labour Court or anywhere else. Therefore, they need us here to protect them and to bring in measures that prevent their income and living standards being dropped below a certain level. That is why we tabled these aspects of the amendments. They are critically important if we are not merely to be giving sympathy to, and shedding crocodile tears for, those who are in that boat. It is within our power to deal with this and cushion the blow, and we should do so. Otherwise, it is completely reprehensible. There is a misunderstanding that deferred pensioners are persons who went off, built a career in a different employment and were able to get pension entitlements through that; they are not. This group, and some of the staff involved, gave decades of service to Aer Lingus and are being harder hit as a result, and they need measures put in place.

We had a discussion on priority orders last year when we were discussing double insolvencies and the change to how defined benefit should be viewed. We did not have a long enough debate on it in terms of the Mercer report which outlined at the time the various different strategies around how to create a priority order. The Mercer report, which the Minister had, was made available a week or at most two weeks before we started the discussion into something as detailed as this.

Even though there are different parameters here, the existing guideline of the priority order is what most look to. It is indicative of the way one, in this case, the IASS, should go. That does not make it right. If we had all of the information that we now have via the IASS, just as if we had all of the information on Waterford Wedgwood, perhaps we would have come up with a different priority order or we might at least have argued from this side of the House for a substantially different priority order. I did so. I submitted amendments which technically would have been grouped with these amendments if they had been allowed, but the restrictions on Opposition Deputies, or maybe all Deputies other than Ministers, in tabling amendments which are a charge on the Exchequer or a charge on the people - the two separate ones because of a bizarre constitutional block which was highlighted at the Constitutional Convention by me and others - mean that the amendments I tabled on this section were ruled out of order. This makes it a little more difficult to argue positively, although in all of this discussion I do not think there is anybody, either on this side of the House or on the Government side, who is not trying to be positive in relation to the pension outcome, whether in the case of the IASS or Waterford Wedgwood which we discussed previously, or the other DB schemes that are being changed to defined contribution schemes. I have sympathy for the amendments before us because each of them is trying to give a different approach than the current approach.

I repeat for the benefit of the House that the arrangements in the legislation are designed to get the maximum number pension funds, which for a variety of reasons have come into very serious deficit, over the line.

Earlier I addressed the matters which Deputies Ryan and Clare Daly raised in relation to what happened to this particular pension fund. I listened carefully to everything Deputy Clare Daly stated and a number of points she made about what may or may not have happened to this fund and how it may or may not have been managed. I repeat it is important to bear in mind that the provisions in section 50 of the Act do not differentiate between active and deferred scheme members as these members are participating in a scheme during the phase where members accumulate pension rights. However, the extent to which pension and payment can be restructured is limited. In the Act debated last year, the first €12,000 of pension is protected. As most of those in these schemes and in this one as well who have long service would also have a State contributory pension, as the Deputy was suggesting, we are trying to protect those fully on a combined basis of €24,000. Given the level of entitlement that the lower paid may have to pensions, that is a significant and strong feature of the legislation which I introduced.

Between €12,000 and €60,000, it can be reduced by up to 10%. Up to €60,000 a year, and €60,000 is a significant pension, the reduction above the €12,000 is 10%. For those in excess of that, those over €60,000 a year, which would be quite a significant pension, the reduction increases to 20%. In addition, in many pension funds, because of the nature of the employments, persons would have been in insurable employment and there may be a full entitlement to a contributory pension. Essentially, these changes provide for the sharing of the risk of scheme underfunding across all of the scheme members. The issue of how these changes might be applied is a matter for the scheme trustees who, I stress, are required under trust law to act in the best interests of all scheme beneficiaries just as they are required to administer the scheme in the best interests of the beneficiaries and they are required to administer it properly in the context of trust law.

I addressed some of the comments of Deputies Ryan and Clare Daly in my earlier response. I do not propose to accept these amendments for the reasons I have set out.

The Deputies should bear in mind that what we are trying to do here - there is no disagreement between either side of the House - is to protect as far as possible persons of different categories in defined benefit schemes which, unfortunately, are in difficulty because of what has happened to schemes. The schemes are made up of two parts: the employer and the employees. Obviously, the employees could be persons currently on pension, current workers or persons who once worked in the company but subsequently left. What employees have done subsequent to leaving the company is a matter for them. Whether they were in other employments or other businesses subsequently is beside the point in relation to the trust rules and what the trustees are obliged to do and how they are to operate in the best interests of all the members.

Amendment put and declared lost.

I move amendment No. 25:

In page 4, between lines 21 and 22, to insert the following:

“Amendment of Pensions Act 1990

3. The Pensions Act 1990 is amended in section 50 by inserting a new subsection after subsection (2) as follows:

(2A) The Pensions Authority shall not direct the trustees of a pension scheme to reduce the benefits of current and former scheme members and/or post-retirement increases in benefits for pensioner members where a sponsoring company or its parent company have the financial capacity to meet the under-funding in the scheme without precipitating wage cuts or redundancies.”.”.

Amendment put and declared lost.

I move amendment No. 26:

In page 4, between lines 21 and 22, to insert the following:

“Amendment of Pensions Act 1990

4. The Pensions Act 1990 is amended by substituting the following for section 50(3)(a)(i)(II) (inserted by the Social Welfare and Pensions Act 2009) as follows:

“(II) members whose service in relevant employment has ceased and who have not reached normal pensionable age and who have an entitlement to a preserved benefit of less than 20 years or any other benefit under the scheme.”.”.

Amendment put and declared lost.

I move amendment No. 27:

In page 4, between lines 21 and 22, to insert the following:

“Amendment of Air Navigation and Transport (Amendment) Act 1998

4. The Air Navigation and Transport (Amendment) Act 1998 is amended by inserting a new section 32A as follows:

32A. The IAS Scheme shall not be allowed to close its pension scheme except where the scheme has reached a minimum 90 per cent funding standard.”.”.

Amendment put and declared lost.

I move amendment No. 28:

In page 4, between lines 21 and 22, to insert the following:

“Amendment of Air Navigation and Transport (Amendment) Act 1998

4. The Air Navigation and Transport (Amendment) Act 1998 is amended by inserting a new section 32A as follows:

32A. The IAS Scheme shall not be allowed to close its pension scheme except where all pension scheme members are treated in an equitable manner on the winding up of that scheme.”.”.

Amendment put and declared lost.

I move amendment No. 29:

In page 4, to delete lines 22 to 24 and substitute the following:

“Short title, construction and collective citations

5. (1) This Act may be cited as the Social Welfare and Pensions (No. 2) Act 2014.

(2) The Social Welfare Acts and this Act (other than section 4) shall be construed together as one Act.

(3) The Pensions Acts 1990 to 2014 and section 4 shall be construed together as one Act and the collective citation “Pensions Acts 1990 to 2014” shall include that section.”.

Amendment put and declared carried.
Amendment No. 30 not moved.
Bill, as amended, received for final consideration.
Question proposed: "That the Bill do now pass."

I thank the Deputies. I understand that the issues we have debated in recent times are very difficult. There has been a very intense negotiation of mediation with the Waterford Crystal workers. I had been attempting to have mediation done on the matter over a protracted period. I was not able to bring forward the amendment which I tabled on Report Stage before then because the mediation had not been completed. I am pleased to say the mediation is now complete. The Bill will go to the Seanad tomorrow. It will be for the former workers in Waterford Crystal to make a decision on the recommendation of the mediator, the chairperson of the Labour Relations Commission. I thank the Deputies for giving the time and space to allow the Report Stage amendment to go forward.

Question put and agreed to.