Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Tuesday, 7 Feb 2017

Vol. 937 No. 3

Pensions (Amendment) (No. 2) Bill 2017: Second Stage [Private Members]

I move: "That the Bill be now read a Second Time."

I wish to share my time with Deputies Darragh O'Brien and Mary Butler.

Even before 2008, defined benefit pension schemes were under pressure. Of course, this trend was accentuated by the crash in 2008 which is why, I suspect, in 2008 the pensions regulator suspended the minimum funding requirement. This was widely seen at the time as an attempt to allow defined benefit pension schemes which were struggling some breathing space to weather the storm. We had an election in 2011. I recall this was an issue during the campaign and the then Opposition parties, particularly the main Opposition party, promised to do something about it. They did not do anything for two years, but they did something about it in 2013 which, unfortunately, made matters much worse. They restored the minimum funding standard in 2013 and added a 15% reserve on top of it. In addition, they prised €2.5 billion out of pension funds by way of a levy. Even pension funds that were in difficulty had to pay this levy. One had a situation where some sponsoring company and its employees had built up a pension fund, it was not sufficient to discharge the accrued liabilities to the employees and nevertheless they had to pay a levy to the Government to further deplete their resources.

There are two aspects of the pensions system I want to deal with and there is a third dealt with in the Bill to which my colleague, Deputy Darragh O'Brien, will refer. The first one is a glaring anomaly whereby under Irish law a company which is perfectly solvent can allow its defined benefit pension scheme to run into deficit and then decide unilaterally to close it down to the detriment of those who have been paying into it, in many cases, for ten, 20, 30 or 40 years. I have come across persons who were coming quite near retirement when their scheme was arbitrarily shut down. The supreme irony of the situation, as I am sure Deputy Mary Butler will tell the House, is that if both the company and the pension scheme become insolvent, because the Government was forced to give a correct interpretation to the EU insolvency directive in the Waterford Glass case, the pensioners would get practically all they were due. In other words, the more solvent the company the less chance the pensioners have of getting anything in the event of a closedown.

Somebody who has paid into a pension scheme for many years in the legitimate expectation that he or she would get a certain return is entitled to have a situation where, if the company sponsoring the scheme into which he or she has been paying is financially viable and in a position to pay up the accrued liabilities of the pension scheme, the company should be compelled to do so before it winds the scheme up. This has been the situation in the United Kingdom for more than 20 years. Section 75 of the UK Pensions Act 1995 provides that in such a situation where the company is solvent, the company is in a position to pay and it decides to close down the defined benefit pension scheme, the company is not allowed to close the scheme down until such time as it has made up the deficit.

Admittedly, there have been a number of studies, debates, reports, etc., on this legislation and, of course, it has been found to be imperfect. The main argument is that in some cases a company cannot afford to keep paying the pension and if the company is forced to pay down the crystalised debt, it could drive the company into insolvency to the detriment of everybody. I accept that as a legitimate argument and that is why what I propose is a much more nuanced scheme. I am proposing that the Pensions Authority must give its permission to wind up the scheme if the company is solvent. If the company can establish to the satisfaction of the Pensions Authority that the payment of the full amount would drive the company into insolvency, the Pensions Authority should be able, at its discretion, to allow the company to pay a lesser amount - the minimum would be 50%, but I am not inflexible on the amount. I am aware that the Labour Party and Sinn Féin have produced their own proposals on this matter. I have not studied them in any detail but I intend to do so. I do not have a monopoly on wisdom. I am sure the Bill has many defects and if there is anything better in the legislation from the Opposition parties, I would be quite happy to take any amendments they submit on board.

The second problem is that the liabilities of defined benefit pension schemes are grossly inflated because they are based on a fiction. When calculating liabilities, a company needs to have enough funding in the pension scheme to discharge its liabilities if the company were to be wound up tomorrow. This is totally artificial. It takes no account of the long-term nature of pension provision. It takes no account of the fact that companies do their accounts on a going-concern basis rather than on the presumption of wind-up. A proper ongoing funding model will have to be devised to deal with this situation.

In addition, when it comes to valuing the liabilities, there is an equally artificial situation. Not only is the company supposed to have enough to discharge liabilities if the company is wound up tomorrow but it must discharge them by purchasing annuities which are underpinned by the most expensive possible type of bonds, triple A rated bonds. The yield on triple A rated bonds has been very low during the period of the financial crisis - it has recovered somewhat now which makes the situation a little easier. It is high time that this was looked at and an alternative model devised. This is why I provide that the Pensions Authority would look at this situation and report back to the Joint Committee on Social Protection or to both Houses of the Oireachtas within six months with its suggestions in this regard. If somebody who is entitled to a pension of a certain amount on retirement because that is what he or she has signed up for must buy an annuity, a bond which is yielding a 1% return will cost twice as much as a bond which is yielding 2%. Therefore, the standard has been set inordinately high. It is time that some method of recalculating these liabilities was looked at. If that could be done - I firmly believe it can and there are moves to do so in other countries - not only would it make defined benefit pension schemes, many of which are on the brink, viable but it might even turn the tide of closures.

Those are my two requests. There is another aspect to the Bill which my colleague, Deputy Darragh O'Brien, will deal with, but those are the two requests I have for the Minister. I ask the Minister to allow legislation which requires the Pensions Authority to come back to us with a feasible system based on reality of calculating liabilities in order that schemes will not be artificially in deficit, and to correct a blatant injustice, which has wiped out many honourable persons who contributed to pension schemes for years and were left with nothing and which has been allowed to fester for far too long. Those are not unreasonable requests. As I said, the Bill is not perfect and I am prepared to take on board amendments or any suggestions from the Opposition, the Government or whoever, but those two issues have to be dealt with as a matter of urgency. Owing to the difficulties with the British legislation, I have deliberately nuanced my party's approach in order that it will not be as onerous on the sponsoring employer. In other words, I am trying to find a balance between fairness and justice for the contributors and the danger that some might be tempted to wind up existing defined benefit pension schemes in view of the imminence of this legislation.

It gives me great pleasure to speak on this Bill and I commend Deputy O'Dea for bringing it forward. As he said, he has covered certain items in it.

In the six minutes I have available before passing over to my colleague, Deputy Mary Butler, I wish to raise a number of items.

The Minister for Social Protection, Deputy Leo Varadkar, is very familiar with pensions because he had a hand in the undermining of pensions benefits in the past five years, particularly in his role as Minister for Transport, Tourism and Sport when he brought forward the State Airport (Shannon Group) Act 2014 and section 32 therein. It was the first time a Government legislated for the reduction of benefits in a private pension scheme, the Irish airlines superannuation scheme or the airport pension scheme. It was probably the most unjust of the injustices done to any pension scheme member, and I speak as somebody who worked in the pensions sector for 15 years before entering politics. Long standing service members lost 60% of their pension entitlement. Retired members, people of 70 or 80 years of age, lost six weeks of their annuity. It was all for selling the stake in Aer Lingus. The company was shown a roadmap of how to increase its pension deficit with a view to getting permission to wind down the scheme. That roadmap has been followed up to now. During debate on the Social Welfare Bill 2016, the Minister of State, Deputy Joe McHugh, was in the Minister's position as the Minister was not present for that part of the debate. One of the striking features of that Bill was the fact that it contained nothing about private sector pensions in real terms.

I am trying to think of any other Government - many mistakes were made on pensions - that did more to undermine pension provision than the previous one. Deputy Willie O'Dea has mentioned the more than €2.6 billion taken out of people's savings by way of the private pensions levy. Then there was the Social Welfare and Pensions Bill 2013 which was brought forward by the then Minister, Deputy Joan Burton. A number of the items included in the Bill before us now were amendments that were voted down on Committee Stage of previous social welfare Bills. That is the unfortunate position in which we find ourselves.

One element of this first occurred in the pensions section of the State airports Bill, whereby scheme members could be moved unilaterally out of their pension scheme without their permission. It does not matter what their benefits were, how long they stayed in the scheme or how much they have paid into it. They can be moved unilaterally out of their scheme into an inferior arrangement, that is, from a defined benefit arrangement to an inferior defined contributions scheme. That happened to 15,000 people in the airport pension scheme. They were moved out without their permission. Section 2 of the Bill brought forward by Deputy Willie O'Dea provides for the right to appeal. If the majority of members disagree with such action, they would have the right to appeal. We would like to go a step further and provide that they could stop it, but at least an appeal would go to an independent authority. This is something that was proposed in an amendment on Committee Stage of a previous social welfare Bill and it was opposed by the previous Government.

In other countries that are more concerned about the preservation of people's pension rights, a company would not be allowed to wind down a scheme unless it met a 90% funding standard, that is, unless there was money available to pay out to the scheme members. Deputy Willie O'Dea has covered a number of items, particularly regarding how we calculate the liability. The current situation is nuts and it must change. It is absolutely crazy. My main concern about what has happened in the last four or five years is that we have given every employer with a defined benefit pension scheme a roadmap to wind down the scheme. This Bill would redress that somewhat and go some way towards fixing it. I would like us to go further and to go further with redress for people, such as the 15,000 workers in the airport who, for the sake of €342 million which the previous Government trousered through the sale of the State's stake in Aer Lingus, lost up to 60% of their pension benefit. We saw what happened to the workers in Waterford Crystal who had to go to the European court. My colleague will cover that issue.

This Bill is a start in undoing some of the actions taken over the last five years. I favour going further. My colleague, Deputy Willie O'Dea, has produced other legislation to provide for banning any private pension levy in future. It would prevent any future Government imposing such a levy. We intend to continue on this course of trying to protect workers' and pension scheme members' rights and trying to ensure that unscrupulous employers will not remove people's pension rights and the benefits they have built up over time. I ask the Minister to consider what the situation would be in the public service, and I include all the Members in that, if somebody approaching retirement and expecting a retirement pension of €40,000 is told within weeks of his or her retirement that the pension will be €12,000 per annum or less, even nothing in some instances.

Double insolvencies happen. Companies become insolvent and wind up. In those instances the scheme has to be wound down. The Bill provides that if a company is solvent it would have to get permission to wind down the scheme. I would like us to go further on this matter, but this is a start. I hope the Bill passes Second Stage and that colleagues across the House can work on strengthening this legislation, providing more protection and rowing back on some of the retrograde steps that were taken over the past five years.

I welcome the Bill. It provides that workers in defined benefit schemes would be protected from their employers attempting to wind up the scheme. Tonight's debate is the first opportunity for the Dáil to discuss this important topic and find a legislative solution to a problem that is clearly evident. In the past few years we have seen many large, financially solvent companies wind up their pension schemes and jeopardise the future pension payments of their workers.

The first case that comes to mind is that of Waterford Crystal. The Waterford Crystal workers were in that position and had to take their case to the European Court of Justice to win their appeal. Simply put, the workers alleged their defined benefit pension entitlements were not protected in 2009 when their former employer, Waterford Crystal, became insolvent and their defined benefit pension scheme was wound up with a deficit of €110 million. Those circumstances culminated in the workers only receiving between 18% and 28% of their expected entitlements, which the European Court of Justice found did not amount to protection by the State. It is bad enough to lose one's job and be obliged to apply for jobseeker's benefit, but it adds insult to injury to find out that one's pension benefits are lost after paying into the fund for years - for up to 40 years for some Waterford Crystal workers.

The fight of the Waterford Crystal workers was long and protracted, with the European Court of Justice rejecting the Government's argument that the State contributory pension should be taken into account in assessing how much of the lost pensions should be made up following the insolvency of Waterford Crystal and its pensions fund in 2009. There is still a group of approximately 80 former employees of Waterford Crystal, who were employed on a contract rather than a full-time basis, yet to be paid under the terms of the pensions settlement negotiated between the Government and the Unite trade union. I appeal to the Minister to bring this process to finality and to end the pensions saga that has been ongoing since 2009 for the workers of Waterford Crystal.

I support the Bill. Employees need greater pension protection. I have spoken about the Waterford Crystal workers, but there are many more. The case of Independent News & Media was extensively reported before Christmas 2016. Independent News & Media pensioners lost approximately 40% of their entitlements in a 2013 restructuring plan under which the company undertook to put €5.6 million into the scheme for ten years. The recent decision taken by the management of Independent News & Media to wind up the defined benefit scheme means the members will suffer a further reduction of approximately 30% in their remaining pensions benefits. It has been reported, although it is denied by Independent News & Media, that the wind up of the defined benefit scheme will strengthen the balance sheet of Independent News & Media and will result in ongoing savings every year. However, the full extent of the savings will largely depend on any deal reached between Independent News & Media and the trustees of the defined benefit scheme.

There is a weakness in Irish legislation that allows healthy sponsors to walk away from defined benefit pension plans by shutting them down without creating a high priority debt on the employer. It is hard to credit that a financially solvent company would be allowed to wind up its pension scheme, thereby reducing the pension entitlements of its workers. Companies have an obligation to treat their employees fairly and equitably. The Bill aims to address the issue of solvent companies closing defined benefit pension schemes to the detriment of the scheme's workers.

Profitable firms should not be allowed to walk away from a defined benefit scheme. I reiterate my support for the scheme.

I welcome the opportunity to engage in a discussion of the problems in defined benefit pension schemes. The provisions contained in the Bill propose major changes to the Pensions Act. The changes would have significant and far-reaching consequences for the defined benefit pension sector in Ireland. I will speak first about the general issues affecting defined benefit schemes and then about the impact of the provisions contained in the Bill.

Defined benefit schemes have been facing substantial challenges in the past two decades due to volatility in the stock markets, increasing liabilities arising from the demographic pressures of increasing life expectancy, low interest rates and regulatory requirements. The cost of providing benefits has increased at a rate that has not been covered by the investment returns earned by pension schemes. In addition, accountancy standards which make pension liabilities very apparent on a company’s balance sheet contribute to the pressures under which defined benefit schemes are operating. During the financial crisis the decline of such schemes accelerated to the extent that the whole sector was at risk. At that stage, a series of legislative amendments were brought forward to alleviate the position. This followed much consideration of the matters dealt with in the Bill such as balancing returns between members, debt on the employer and pension protection funds.

There has never been a statutory obligation on employers under Irish law to contribute to a pension scheme, nor to accept liability for deficits therein. The Bill would turn a voluntary contribution into a mandatory obligation and would, therefore, be a major change. Most defined benefit pension schemes were established under a trust deed. The employer generally undertook to be bound by the rules of the scheme and meet certain liabilities and duties on a voluntary basis. In spite of the difficulties, many employers have made great efforts to support and deliver on the pension promise made to scheme members.

Many scheme trustees are working hard to ensure the ongoing viability of their schemes. This process is best managed through discussion and negotiation between trustees, employers and members, where efforts are made to reach agreement on the steps that must be taken to secure scheme viability. These steps generally include a mix of measures such as increased employer or member contributions, longer working through changes to the retirement age and amended benefits. This is the best approach to dealing with scheme difficulties. Further steps can and should be taken regarding the funding standard.

Following discussions between my officials, the Pensions Authority, the Society of Actuaries in Ireland and the Irish Association of Pension Funds, the Pensions Authority will shortly bring forward proposals to allow some additional flexibility for defined benefit schemes and to tackle some of the difficulties in the current operation of the standard. I intend to consult employer and union representatives on these proposals before making any change, as is appropriate.

I turn to the provisions contained in the Bill. As Members are aware, it can be very difficult to put forward legislative proposals which would have the desired effects without negative implications. The area of pensions is very technical and the issues are complex and not often amenable to easy solutions. While it may seem that a few simple changes could provide scheme members the level of security they desire, the unintended consequences can be far-reaching and destructive.

Section 2 proposes that an appeals mechanism be put in place to provide for appeals by scheme members where a pension scheme is being wound up, frozen or restructured by scheme trustees and any category of members is being treated in an inequitable manner. There are already regulatory safeguards in place for members where a wind-up or restructuring of a scheme is proposed. Trustees must have undertaken a comprehensive review of the scheme with a view to its long-term stability and sustainability. This includes asking the employer for contributions sufficient to ensure scheme funding. Trustees must notify, in writing, the scheme members and anyone receiving benefits under the scheme, as well as the trade union or representative group representing scheme members, before they make an application to the Pensions Authority to reduce benefits. The scheme members or their representatives are entitled to make written submissions to the Pensions Authority which will consider submissions prior to making a direction. Groups representing the interests of pensioners and deferred scheme members have a right to appeal a direction by the Pensions Authority to the High Court on a point of law.

While the Bill seeks to introduce an appeals mechanism, it does not indicate what should happen if the appeal is successful. It aims to prevent schemes from being wound up where any category of members is being treated inequitably. However, this inequity is not defined in any way in the Bill. For example, if it is intended that all members should have equal priority, it would be a significant change from the current position where pensioners have higher protection than other categories. While I am sure this is not the intention of the proposers of the Bill, it could be a consequence. Rather than being protected as they are, the Bill could expose existing pensioners who are already retired to having their pensions cut substantially in the event of a wind up.

Having discussed it with the Attorney General, we are also concerned about its constitutionality under Article 43, given that it would be retrospective and could constitute an expropriation of vested rights and an infringement of property rights. The Bill makes no provision for making up any shortfall or paying contributions. In some cases, stopping a scheme from winding up or the "extend and pretend" solution would result in a far worse outcome for some scheme members, particularly younger ones who are still paying in. The scheme would have to continue with solvency potentially deteriorating and older members using up the assets before younger members retired. This would surely be the most inequitable of all outcomes, effectively turning a defined benefit scheme into a pyramid scheme, ironically as a result of proposals which have the avowed aim of ensuring equity.

Under legislation passed in 2013, changes were made to extend the categories of benefits which could be considered in a restructure of scheme benefits to include a portion of pensioner benefits. These changes were designed to spread the risk of scheme underfunding across all scheme members and beneficiaries. The change also recognised that all beneficiaries of a scheme, members and pensioners, needed to share the risks when a scheme was underfunded.

In section 3 the Bill further seeks to prevent the wind up of a defined benefit pension scheme when the value of the assets of the scheme is less than the amount of the liabilities until the deficit is eliminated. This would effectively put a debt on the sponsoring employer equal to the amount of the deficit. However, if the Pensions Authority was satisfied that the payment of the entire debt at the time of proposed wind up would present a serious risk to the solvency of the employer, the Bill might allow for the payment of up to 50% of the deficit and-or allow the company up to five years to pay the deficit.

I understand there is a real desire to protect scheme members and prevent employers who will not pay, as opposed to those who cannot pay, from walking away from the schemes they sponsor. Serious consideration was given in the past to imposing a statutory obligation on employers to secure a minimum level of funding before a scheme could be wound up. The advantage of placing a minimum obligation on the employer would be to protect the benefits of current and former schemes members. It might also prevent employers from walking away from defined benefit schemes and encourage employers to ensure schemes were well funded and managed. However, there are also strong arguments against the introduction of an employer obligation. Imposing an employer guarantee might be seen as unfair on employers who have voluntarily set up defined benefit pension schemes. The previously voluntary commitments under these schemes would become mandatory, whereas there would be no corresponding obligation on employers who had set up defined contribution schemes or had not set up any pension scheme at all. To avoid debt, there is a danger that some employers with underfunded schemes might wind up the scheme in advance of completion of the legislative process which, by its nature, will take some time to put in place. Anti-avoidance structures would be necessary to prevent employers from restructuring to avoid their obligations. Account would have to be taken of single-employer schemes, multi-group schemes and those with multinational parent companies and how solvency could be measured in these complex circumstances.

The extra funding burden would accelerate the closure of defined benefit schemes in the private sector. The result of such a change, designed to protect the position of defined benefit pension members, would have the opposite effect. Few, if any, defined pension schemes would remain. While putting a debt on the employer might improve scheme security, in most cases, the pension liabilities and investment risk assumed would be too big for a company to support. It could jeopardise the viability of the businesses and jobs of those employed, given the employers' lack of capacity to absorb this extra liability. In such cases, people could lose their jobs long before becoming eligible for a pension. It could encourage imprudent investment behaviour by trustees, given that losses would have to be made good by the employer.

There is no readily available, reliably accurate and consistent measure of solvency and the Bill does not propose one. Furthermore, there is no connection between a company being solvent or having net revenues at a point in time and its ability to fund a scheme in the long term. Rather than implementing a solution by putting a debt on the employer with unknown consequences, the approach taken to date is to nurse and support schemes to gradually move to more appropriate funding levels in the short, medium and longer term using regulation and the benefits of a strengthening economy.

Changes such as the pensions insolvency payments scheme, sovereign annuities, the introduction of a risk reserve and allowing for the restructuring of scheme benefits are all measures which have been introduced with this approach in mind. These have all been put in place in recent years.

Section 4 proposes that the Pensions Authority prepares a report on the feasibility of changing the minimum funding standard for defined benefit pension schemes and establishing a pension protection scheme within six months.

I have to interrupt the Minister as he has exceeded his ten minutes.

Perhaps the remainder of my speech might be included in the record.

No, that only applies to parliamentary replies. However, the Minister's speech has been circulated.

Deputy John Brady is sharing time with Deputies Denise Mitchell and David Cullinane.

I welcome Fianna Fáil's bringing forward of this Bill. It is timely that, having been in government for decades, it has now decided to actually do something to protect workers’ pensions.

That is a real pity as we expected the Deputy to be constructive.

The Deputy should have manners.

Deputy John Brady came in to debate our last Bill also and spouted nonsense.

The concerns around defined benefit pension plans are nothing new. Fianna Fáil could have done this a long time ago when it had a majority Government and the power to do so.

Back in 2012, the OECD clearly identified the allowing of healthy sponsors to walk away from defined benefit pension plans and shutting them down as a weakness in Irish legislation. After all these years, a Sinn Féin Bill introduced last week spurred others to introduce a Bill on this matter only two days later, although late in the day. Last week, Sinn Féin introduced a Bill to directly address the issue of healthy companies making a conscious decision to wind down defined benefit schemes and walk away from their pension obligations. Our Bill would ensure no company with positive net revenues, or which has a parent company with positive net revenues, would be allowed to close a defined benefit scheme unless this scheme has reached a minimum 90% funding standard. This would have prevented what happened last November in Independent News & Media, INM. This would have sent a clear message to profitable companies that they will not be allowed to simply decide to renege on and walk away from their obligations to their employees.

The Government could have supported and introduced our Bill without, in the words of the Minister for Social Protection, Deputy Leo Varadkar, “threatening a company’s financial stability” or “rendering some employers insolvent”. We are only talking about companies which have positive net revenues. Only last month, the Minister made it clear he had no plans to bring forward legislation regarding defined benefit schemes but that issues in respect of these schemes are continually scrutinised by his Department, especially given the current environment. If this is true, what conclusion did his Department’s scrutiny come to on the back of the pension debacle at INM last November? That company announced its intention to shut down its defined benefit pension scheme, inflicting cumulative benefit cuts of up to 70% on some of its current and former employees. What was the Minister’s response? He stated, "My Department scrutinises issues around defined benefit schemes." It simply does nothing. That is not good enough for workers in this State. The Government’s inaction sends a message to companies right across this State that they are free to consciously wind down defined benefit schemes and walk away from their pension obligations.

Certain companies have taken, and will take, advantage of this weakness in legislation which allows them to walk away. In recent days, I have been contacted by several employees from a profitable and well-known company which has announced to its employees its intention to move from a defined benefit to a defined contribution pension scheme. This will remove the defined benefit pension scheme and replace it. Despite all these issues, the Government chooses to sit on its hands.

This Fianna Fáil Bill is not without its faults. If we were to see a similar situation to that of Clerys in 2012, would this Bill protect that pension scheme? In that case, 460 employees of Clerys were left without their pensions. For the 500 active defined benefit schemes remaining and for the 120,000 members within them, steps must be taken. We have a responsibility, as legislators, to take action for the protection of pension schemes and for the protection of workers. For that reason, Sinn Féin will support this Bill. However, we will be looking at ways to improve it to ensure maximum protection for workers.

The Irish Congress of Trade Unions, ICTU, sent a call to all Opposition parties to work together on this matter. I am willing to sit down with Deputies Willie O’Dea and Willie Penrose and others to ensure heads of a Bill are prepared to strengthen this area to guarantee the pensions of all workers are protected across the State.

Any action to protect the tens of thousands of workers in a defined benefit pension scheme is welcome. It has been far too long that workers’ financial security has been left so uncertain. We must aim to create firm legal protection for these workers and ensure legislation is not enacted for the sake of political action alone. Instead, it must provide absolute legal safeguards.

The procedures in the Bill aim to create an appeal system and a level of oversight for the closing of schemes. It also provides added functions to the Pensions Authority. We must guarantee these powers are effective. Any improvement on the present appalling situation where there is no legal protection or oversight needs to be examined. Without this protection, these pensions are solely the responsibility of scheme members and are the subject of many disadvantages, such as conflicts of interest. The Bill states it “shall be illegal for a solvent company to wind up a defined benefit pension scheme”. We must ensure this is enforced. I hope legal change occurs in this area as soon as possible.

Last week, Sinn Féin introduced its own Bill on defined benefit pensions. It is clear all Members see the problems faced by workers and we know they need legal protection. We acknowledge the will in the House to address this problem. We must also note the overall inequalities in the pension system in general. Hopefully, Members will support creating a fairer pension system in the future. With the present Bill, we believe this area of defined benefit pensions needs to be addressed through legal protection as soon as possible. Accordingly, we largely welcome the Bill.

I commend Teachta Willie O’Dea for bringing this Bill to the floor of the Dáil and giving us an opportunity to address the important issues it covers. I am glad my party is supporting the Bill, despite the fact we see some flaws in it. In the same spirit, Sinn Féin has brought forward Bills, the thrust of which Fianna Fáil states it supports. However, as it sees the Bills need to be amended, it either votes them down or kicks them to touch rather than supporting them.

Perhaps they will take a lesson from us. We will support Bills by all parties if we believe the broad thrust of the Bill is well intentioned. Committee Stage is when we air our difficulties and highlight flaws in any legislation. In the spirit of generosity, I support the Bill that has been proposed and I commend the authors on it. Time and again, when it comes to workers' rights and their entitlements, this House has been found wanting.

Like the bus that sometimes never comes, we did not see any Bills in respect of this issue for a long number of years and now three show up at the same time and we have not even seen the Minister's Bill on which he says he is working. That is good because it shows there is an energy in the House and a commitment to at least addressing the issue. A range of different views have been expressed about how it should be addressed but obviously it is something that we need to commit to and resolve very quickly. The recent action by Independent News & Media to close its defined benefit scheme, cutting staff payments by over 70% even though the parent company is in profit, shows the type of ruthless behaviour we are dealing with here. The company will be paying out its dividends to shareholders. Two of the most famous of them, who are tax exiles - one of whom has brought a case against this House - will receive their payment but they can take money from pensioners, which is unacceptable.

I also raise the issue of Waterford Crystal pensions. I am glad Teachta Mary Butler raised it. She has done some good work on this issue. She said we have to make sure that we do not add insult to injury, so I have to, in all conscience, remind the Deputy that it was Fianna Fáil that made sure those workers were dragged kicking and screaming through the courts. It was the former Fianna Fáil Government that did not face up to its responsibilities which led to Waterford Crystal workers having to take a court case to the European Court of Justice. The State and the Fianna Fáil Party fought them every single step of the way. I am glad the previous Government dealt with it and I am glad the European Court of Justice ruling found in their favour. I am also glad the vast majority of those workers were protected and have received their payments.

As Teachta Mary Butler did, I will raise the issue with the Minister of those people on contracts of service who had a number of unpensioned years. As the Minister knows, a number of meetings took place, one of which I attended with the Minister and union representatives. There was a willingness on the Minister's part to examine the issue but those workers have heard absolutely nothing yet. The Minister of State, Deputy John Halligan, was on local radio in December and said the issue was sorted and the workers would get their entitlements within a matter of weeks. Weeks have passed and they have heard nothing. I am asking the Minister if he can clarify this once and for all. Is he looking at this and will he resolve it? Will he make sure those workers get the entitlements they feel they deserve? The Minister is concerned about issues of precedence and I know he is looking at legal issues, but workers deserve to know whether this will happen. They have been kept in the dark and dragged along for months and years on this issue and they simply want a "Yes" or "No" answer. Will the Minister deal with this issue? I appeal to the Minister to give us the clarity in the House in order that we can give it to them. We are being contacted almost on a daily basis by workers who are worried and asking if this can be done.

We support the Bill put forward by Fianna Fáil. I read the Minister's speech. Any time a Bill is brought forward by the Opposition, it seems to be this Government's modus operandi to say it agrees something has to be done but does not agree with the substance of the Bill brought forward and that it has its own Bill. The Minister said:

I will in the near future bring forward my own proposals, carefully thought out and fully analysed to help alleviate some of the difficulties currently being experienced by defined benefit schemes and their tens of thousands of members.

Why not just take this Bill and analyse it? The Minister could take parts of the other Bills that have been proposed on First Stage, like the one by Teachta Brady. Why not do that? Why delay this even more? Is the Bill so flawed it cannot be amended? Is that what the Minister is saying?

The Minister does not believe it can be amended, but any Bill can be rewritten. I do not think the Minister has given sufficient justification for saying he will oppose the Bill. With Sinn Féin, Fianna Fáil and some of the Independents, we have the numbers to get the Bill passed, which is new politics; therefore, the Minister will have to engage on the Bill. When he says he will bring forward his own proposals in the near future, what does he mean by the near future? Is that weeks or months? When will it happen? When he says the proposals are carefully thought out, can he give us further clarity on exactly what are those proposals? How do they differ from those in this Bill? How will they make a difference to people who are affected by this issue?

The Minister should at least recognise there is good intent from this side of the House, from those of us in Sinn Féin, the author of the Bill and other speakers who are yet to speak. I hope, through the co-operation of everyone in the House and all parties, we can at some point get a Bill through that speaks to and deals with the real problems that many workers in defined benefit schemes have had to deal with over a long number of years. When the Minister gets a chance to respond, he might also address the Waterford Crystal pensions issue.

I am glad to have the opportunity to make a short contribution to the debate on this important area of pension law on behalf of the Labour Party. I applaud Deputy Willie O'Dea for introducing the Bill. Pension law is a complex area that needs significant and detailed examination, scrutiny and discussion in order to achieve change. Like everyone else in the House, I do not have a particular monopoly on wisdom or expertise in this area. My Bill was launched on 24 January but I do not care whose is first, second or third. We all have a collective responsibility to ensure that whatever is for the betterment of over 100,000 workers is achieved.

I have done some studying in this area in the past few months. It is an area that has not exercised me legally up to now. I looked at the Pensions Act 1990 and the subsequent amendments. I thought there were three main deficiencies in it. There was a lack of legal obligation on solvent employers to fund pension schemes. All the Bills are trying to achieve that, although they may be coming at it from different perspectives. This racket in which solvent employers can legally walk away from their liability to defined benefit pension schemes, as required under their employment contracts with current or former employees, by simply deciding to wind up a scheme at any time is incredible. They can just walk away. The incongruity of the whole thing, to which Deputy Willie O'Dea referred, must be addressed.

In recent times, we have had a number of very solvent employers with insolvent schemes as determined under the jackass method of determining liabilities and funding standards. In the current climate, with President Trump running crazy over there, inflation about to come back, money being made on bonds and issues like that, the €20 million or €50 million will be eaten away shortly and we will get back to normality, even in the current crazy system of evaluation. Leaving that aside, we have that scheme and unfortunately employees in that situation are left in the lurch. Perhaps they were entitled to €250 but they will end up with €60 or €70 if they are lucky.

We also have the situation referred to by my colleagues involving Waterford Crystal. In that situation, there was a double insolvency because the company and the scheme were insolvent. The State, under the insolvency provisions, had to step in, directed by the court and under European law. Those people had some sort of a scheme. The Deputies are arguing about it being accelerated and finalised, and hopefully that will happen for all the workers, but at least the scheme is there. One should compare that to somebody in the other position. The incongruity of that situation deserves our legislative focus even if nothing else happened. We should forget about some of those smart schemes and the clever accountants and lawyers they have to make sure they are always ahead of the posse. That is the point. It is all possible because most defined benefit pension trustees and rules allow the employer to wind up pension schemes and cease contributions while just ignoring any deficit in the fund of the scheme and its inability to pay the profits. It is most unsatisfactory that an employer's liability - the funded deficit on wind up - is determined solely by the trustee rather than by legislation.

The problem is that the trustees do not even get an opportunity to review the trust deed. The employer is always in the dominant position and that is the problem. The inequity is highlighted by the fact that nearly 100% of employees were not aware that the defined benefit clause of an employment contract was not a binding liability or an obligation on the employer. I have met a number of experienced employers and as far as I could gather they made no effort to bring the relevant clause of the trust deed to the attention of their employees. The fact companies reported the pension deficit as a liability in their audit and public financial statements only added to the employees' belief that their pensions were guaranteed.

My Bill on this area would make a useful contribution to this debate. The accounting standards require an employer to recognise its liabilities to a pension scheme in its financial statement, in other words, in its balance sheet. The way I constructed a proposal in this area was that the liabilities would be removed from the balance sheet, which would have a transformative effect on a company's accounts. Some of the accounts we considered lately - for example, those of the media companies that have been highlighted and companies in other industries - appeared to be much healthier than what was shown. I was shocked to hear of another company affected in this area in the south. I was getting rid of this facility in my Bill. In other words, if we take the step of removing those liabilities from the balance sheet, that would immediately become a crystallising event. It is a different way of doing it from what is proposed in Deputy Willie O'Dea's Bill but it is the same principle. The debt then would be recoverable as a contract debt. It would be removed from the balance sheet but if one was being a smart aleck in doing that, it would not make any difference in that an event has been triggered and it has crystallised the debt. It is important that is achieved in whatever way it can be achieved. The very fact it is not governed by statute law is something we have to be mindful of. There are a number of areas there on which we can work.

The other aspect is the lack of a legal obligation on employers to give notice to the trustees of a decision to wind up a defined benefit scheme. The trustees are being left in the dark. The Minister made a number of reasonable and valid points but it is time to call off this racket where workers and everybody else are being left in the dark. A company could advise the trustees that the scheme was wound up at a board meeting earlier in the day and that it was making no further contributions. In pursuing an employer through the courts, the trustees are currently at a huge disadvantage. If the employer acts in accordance with the trust deed, there is no legislation requiring any notice period but we would not need a notice period if either of those events was triggered.

There is also Deputy John Brady's Bill, which I briefly read. That would trigger the situation and no notice period would be needed. We would have sorted it out and would have circumvented people who are trying to circumvent their obligations. We would have neatly snookered them, and that is our job. It is no use having shareholders running off and smiling and 110,000 workers being left in the gap.

I know what the Minister said and he is probably in the right place on this. He has got legal advice but we could also put our collective heads together. I acknowledge the work done by Deputies Willie O'Dea and John Brady and I wrote a letter to them. The Minister has a pensions Bill coming forward and we have the draft heads of it. If we do not catch him in the swings, we will catch him at the roundabouts. I am going to convene a forum with Deputies Willie O'Dea and John Brady and bring in the NUJ and all those affected by this. There are other companies in the south which have also been affected, and we can work this out in a collective way. I know the Minister will park this Bill but he will not park the pensions Bill that is coming forward and we will get an opportunity to contribute to the discussion on the heads of it. If the Minister brings forward a Bill, we will make our submissions at that point and impart our collective wisdom and in that way we will make an advance on this. We will send a signal to workers that this is not on. We do not want to land them into any difficulty. The Minister said the cure could be worse than the disease. I understand what he is saying, but there is a way around that. It is up to us to ensure that whatever legislation we introduce in this House is effective and meets its objective, which is to protect workers and ensure we do not see them skinned of moneys that they paid into schemes.

The Minister is trying to bring forward a universal pension scheme and I support him 100%. He is right on that and I hope that will be a good legacy of his but how can he encourage people to pay into schemes in that situation when they are looking at the publicity surrounding what is going on. I am referring to the scandal of people running away from their obligations and it is not the workers who are running away.

Deputy Bríd Smith is sharing the next time slot with Deputy Mick Barry.

We, in People Before Profit, welcome the fact there is a Bill before the House to deal with the crisis for workers in pensions schemes and how the attack on those pension schemes has become like a corporate grab of workers' money to be put into the coffers of the very wealthy, but there are major weaknesses in this Bill. We will seek to amend it in that, as it stands, it would do very little to stop the effective theft of the pensioners' livelihoods. The Bill would allow schemes to be wound up only with the approval of the Pensions Authority in certain circumstances but what is needed is a very simple Bill whereby companies that are solvent and healthy would not be able to wind up their defined benefit schemes. That would be a much more appropriate response to what is a modern day global attack on the rights of pensioners and workers in general.

I have a list of global corporations extending to 15 pages that have moved in the past few years from having defined benefit to defined contribution pensions schemes. They are household names such as Xerox, Walt Disney, Motorola, The Journal-Register, Remington, Hewlett Packard and Boeing and there are many more that have moved from having defined benefit to defined contribution pension schemes. There is a graph with respect to Britain that clearly shows that the number of defined benefit schemes is decreasing while the number of defined contribution pension schemes is increasing. That move is transferring all the responsibility on to the worker. Defined benefit schemes are being presented in the modern world as a problem, an outdated luxury that firms can no longer afford and that companies can no longer put up with. The issue affecting us is not only a local one but a global one. Locally, by which I mean in this State, since 2008, 65,000 workers have been affected by the closure of defined benefit schemes. Some 2,500 schemes of this nature existed a decade ago and today there are only 700. The most recent illustration of this was prior to Christmas with what I would call the raid by Denis O'Brien's Independent News & Media and his cohort of very wealthy people on the retirement earnings of those workers in INM whose pensions had been cut by 40%. Many of them were moved on to a defined contribution pension scheme and a new proposal was brought in to further cut it by 30%. The effect of this so-called commercially sensible proposal was that the workers, many of whom have worked there for more than 40 years and who would have expected to get a pension of €30,000 to €40,000 a year, will now see their pension fall to €15,000 to €16,000 a year, despite having made significant contributions to their pension scheme. That is a direct swap from the pockets of pensioners and workers to the pockets of Denis O'Brien and the very wealthy in this country.

INM is an example of that, but we are also seeing that happen in Irish Life, a company that deals with individual and business pensions. If that company, which is a very healthy one in terms of its profits and share of the market, gets away with reducing the pensions of more than 1,000 workers by moving from having a defined benefit to a defined contribution pensions scheme, we will see a domino effect in the financial sector, which has already been affected. Aviva and Permanent TSB have done the same and Pfizer Ireland is about to do the same, as are the Grafton Group and Arnotts, and the list goes on. We are seeing an avalanche of attacks on the pensions and future of workers. The argument being made for this move is that workers are living longer.

I reject this argument. We should be celebrating the fact that workers are living longer instead of seeing it as a problem. What is really happening is that the attempt by the modern capitalist system to eat into the rights of workers is being escalated because it is not making the same profits from financial investments as it did in the past. We should reject it and move to a simple system, whereby if a company was financially healthy, its defined benefit scheme could not be cut. We should outlaw such actions and in so doing protect workers' rights and pensions.

Hi Mick,

I am an employee of Pfizer, Ringaskiddy, for 22 years. The proposed changes to the pension that the company is trying to bring in would lead me to have a shortfall of approximately €286,338. I am 51 years old, and to maintain the current value I have on defined benefit, an outlay of €15,849 would be my cost per annum. I have managed to save for my kids' college fees and am privileged to do so. However, it was the company who afforded me this and with no discernible reason want to take it away. With 16 years left to retire, some €300 per week is the incurred cost to me as a result of the company's corporate greed.

Hi Mick,

When I joined Pfizer, Ringaskiddy, the company prided itself in taking care of our pension. The current position by the company has left me and others to reappraise our current outgoings. The real cost to me as an employee is €390 per week. The current profits the company enjoys as a result of Pfizer Ireland delivering quality products on time and at a competitive cost can only be quantified in the billions. Corporate greed at its best.

These are two text messages I received this afternoon from workers in Pfizer in Cork, a company that is trying to wind down and shut down its defined benefit scheme, a move which would adversely affect 1,000 workers. These two workers speak for hundreds of others. The second text message is entirely right when it speaks of "corporate greed at its best". Pfizer International made gross profits of more than $40 billion in the 12 months to 31 March 2016. One product alone produced by the workers in the company, Viagra, makes the company a clear profit of €1 billion every year. The defined benefit scheme is a fundamental part of the terms and conditions of the workers who are taking industrial action which currently takes the form of an overtime ban to protect their terms and conditions. I support them 100% and anybody concerned about workers' rights will do so also.

In 1997 there were 2,315 defined benefit schemes for employees in the State. By the end of 2015, that figure was down to 503. Ironically, given the source of the Bill, much of the decline took place under the watch of the Fianna Fáil Party. However, we, in the Anti-Austerity Alliance, will vote for the Bill which would make it illegal for a solvent company to wind up a defined benefit scheme when underfunded without the consent of the Pensions Authority. That is positive. It would allow a member of a scheme to appeal if he or she believed the wind down to be inequitable. That is also positive. We should broaden the scope beyond mere inequity, but we could address this issue on Committee Stage.

I conclude by echoing the point made by Deputy Bríd Smith, which is entirely right. It is necessary to go further. What should be in place in the law of the land is that it is illegal - full stop - to wind down a solvent fund and rob workers in the way Pfizer and so many other companies are attempting to do.

On behalf of the Rural Independent Group, I compliment Deputy Willie O'Dea on bringing forward the Pensions (Amendment) (No. 2) Bill 2017. I know that others, Deputy Willie Penrose included, brought forward a similar Bill recently.

We have seen huge efforts by unscrupulous big businesses to avoid supporting pension schemes for people who have rightly earned their benefits. Ar an gcéad dul síos, many small businesses and companies pay into such schemes, as do their employees. There is a good relationship and there are honest people involved. We cannot demonise all employers because many of them are and have been for decades supportive of schemes and engaged with their workers in the process, sometimes even without trade unions. Arrangements are in place which are time-honoured and we must salute these companies. Unfortunately, however, there are pressures, as well as significant greed, as seen in vulture companies. Any company that would try to engage in this kind of action to deny workers payback for their valued and gainful employment and the way in which they supported it to get to where it is is a vulture company. These rogue employers will be very hard to stop, but the State must have the resources, the creative accountants and legal people in the Office of the Attorney General and elsewhere to ensure the passage of the Bill. I hope the Minister, Deputy Leo Varadkar, will not oppose it, although I think he will. I do not know why he intends to do so, given the new politics. How many times must the Government be defeated to understand this is a new situation. We should encourage the introduction of Private Members' Bills, especially when they are so necessary and there is such a void in legislation. We were talking about legislation such as the Pensions Act 1990 and its many weaknesses. We must work as a Legislature to deal where we can with issues such as this to have watertight legislation and rules companies cannot evade.

We know what happened in Waterford Glass, a wonderful company which is close to my heart and that of Deputy Mary Butler. I must declare an interest: I have a brother and a sister who worked for years in its Dungarvan plant. It was world-renowned, especially in the United States. It was gobbled up and taken over and greed again got in the way. We are aware of the efforts that had to be made by the trade unions and other movements and politicians at the time to try to cobble something together and the taxpayer had to pick up the tab. It was a costly experience. The Minister has not been in government the whole time since; I am just making the point that we are too slow in closing such loopholes, especially when they affect big business. I encourage big business and support the corporation tax rate and the attraction of big businesses, but they cannot be allowed to get away with what they should not get away with. These are just basic rules and guidelines and good business and proper management practices so as not to allow room for creative accountants and so-called smart-arse solicitors and barristers who think they can pick at them. That is what happens with legislation. That is what they are paid to do and what they claim in their CVs they can do.

The Government needs to wake up. We need a public service with officials who receive proper advice and can see the loopholes. Legislation can be passed with the best will in the world, but there may be unintended consequences. We need to be quicker to react because every day of the week small business people with limited resources have to react in situations where they have no power over what big companies can do. They might be a husband and a wife who are running a business, two brothers or two sisters; it could be anybody. They have to deal with a lot of legislation. I even heard on Marian Finucane's radio programme on Sunday that it had been decided - I do not know from where this came, as I certainly did not see the legislation that passed through the House - to allow 20 days' paid leave to an employee in the Civil Service if his or her partner or spouse passed away. That is tragic and traumatic, but if such a provision were to be introduced in the private sector, small employers would not be able to afford or handle it. They have certain arrangements in place and look after their staff in such cases. They are very flexible and it works both ways for employees and employers. It is fine if the public purse pays but not otherwise.

It affects everybody who is able to do it. That kind of onerous provision on small and medium enterprises, SMEs, is a step too far. I am not anti-worker or against someone grieving. Most of those companies are very helpful and understanding and want a good relationship, want their employees to have that relationship and allow them to grieve and have schemes in place to support them.

This legislation is long overdue. I note from the Minister's contribution that an employee may bring a challenge to the High Court but at what cost? Who will pay for that challenge? That is closing the gate when the horse has well bolted, got in the horsebox and gone home and is in the stable, a different stable, not the one he should be in. We must look into that as well.

The Minister cannot expect employees to fight the battle afterwards and go to court and whatever. We must have the resources of the State. The Minister must ensure he has the brightest and best to advise on this legislation. Straightaway when it is enacted they will be picking on it, like digging the first field of potatoes and the crows land, then the jackdaws and then the scarecrows and the whole lot will come along. These are the same. They are vultures in any language. We need to be there, ready, willing and able to tackle them and send them back to where they came from with their smartarse accountants and their slimy legal aides. I could call them something stronger but I will not.

There is no legal onus on the company to advise the trustees. That is an awful flaw. I am trustee of many companies limited by guarantee and have to take those responsibilities seriously. We have seen what went on in a few credit unions and how one or two bad apples can destroy the whole batch. The scandal of big business, ducking and diving, conniving and contriving to denude people of the rights they have accrued with these defined schemes is not acceptable. It is more distasteful when they are high-powered business people and we can see their hands over everything that moves in Éire, whether it is underground or overground, wind or water. The only thing they do not take charge of is foul wind. Next they will have that handicapped as well.

This Bill and Deputy Willie Penrose's Bill are very timely. Surely, instead of putting this to a vote and having the Government defeated once again, unless it is trying to break a record for the number of times a Government can be defeated in one term, the Minister could have a debate on an amalgam of the three, with the legal expertise the Minister can provide. He could try to deal with the situation and not have any more injustices perpetrated on ordinary decent employees who made their life's commitment to those companies and not have creative accountants and smart alecs laughing all the way to the bank.

On behalf of the Social Democrats, I am happy to support the Bill before us. I hope it will be carried to allow it go forward to Committee Stage because this is an area that has been neglected by the present and the last Governments. It is hard to see any circumstances in which it is defensible that a profitable company that has entered into a contractual arrangement with its employees to maintain a defined benefit scheme should be allowed to renege on that commitment and walk away from the agreement with promises to its workers. This situation has obtained for some time and has come up on a regular basis, particularly in the context of the annual social welfare and the social welfare and pensions Bill. There have been various attempts to close this loophole, which the present Government resisted a few months ago and by the previous Government. I was looking at notes in my office. Deputy O'Dea will be familiar with the amendment to the then Social Welfare and Pensions Bill that several of us put our names to in 2014, stating a sovereign firm shall not be allowed to close a defined benefit pension scheme except where the scheme has reached a minimum of 90% funding standard. The then Tánaiste and Minister for Social Protection argued vehemently against the amendment and refused point blank to give it any serious consideration. It is somewhat ironic that the then Tánaiste's party comes along with Deputy Willie Penrose's Bill. I heard Deputy Willie Penrose making the case and he has received a lot of publicity for various press statements issued in his name saying he was going to sort out this problem. In 2014 when the Labour Party was in a position to do something about this it refused to accept that amendment. There is a big element of crocodile tears on Deputy Willie Penrose's part. Others, however, who put their names to that amendment still fight the good fight in respect of what many of us believe are the State's responsibilities to ensure that they uphold the rights of workers in companies where there is no excuse for them to renege on pension commitments other than the fact that there are funding difficulties in the pension scheme. The company may be solvent and doing well yet our Government seems to think it is perfectly acceptable for a company in those circumstances to walk away. Most right thinking people do not accept that is all right and think companies should not be allowed to do this.

Solvent companies in other jurisdictions, particularly in the United Kingdom, are not allowed to shirk their responsibilities and renege on their commitments in this way. The sky has not fallen in as a result of this in the United Kingdom and there is no reason we should not have the same kind of regime in this country and place the same obligations on profitable employers to uphold the commitments they have given.

The point was made that if Government moved to prevent companies walking away from their defined benefit commitments a flood of companies would do that and attempt to close down schemes. These matters must be dealt with properly and cleverly, and the Government by right, if it was of a mind to address this loophole in our pension law, would move to do that very speedily and avoid giving notice to companies and so encouraging them to wind up their schemes. It is possible to do it and that was done in the United Kingdom. There is no reason that should not be the case here.

The Government is standing idly by and allowing companies to do this to their workers, which is not only a serious injustice to workers who have paid into a defined benefit scheme for 25, 30 or 35 years, leaving them high and dry, but also has implications for State funds because many who lose their defined benefit pension have to claim a non-contributory pension from the State. Once again, the State is picking up the tab for the failure of regulation of private sector companies and that should not be allowed because it is another form of bailout. Overall, the Minister has been exceptionally quiet on pension policy. In response to a recent parliamentary question of mine he referred only to State pension provision.

My understanding has been that even though the Minister for Social Protection is supposed to have responsibility for pension policy, a kind of good cop, bad cop game has always been played between that Minister and the Minister for Finance, who decides when it comes to budget time on the kind of pension tax relief that is allowed and whether it is to continue. Perhaps this has changed.

We have an extremely unfair pension system in this country. We spend over €2 billion on tax relief to assist those who are in a position to put away substantial pension funds. Their handsome pension pots are being subsidised, in effect, by people who cannot afford to make pension provision for themselves. It is entirely unfair that 80% of pension tax relief is benefiting approximately 20% of pensioners. We were promised severe restrictions in this regard. Some restrictions have been introduced, but they are nothing like what was promised. The previous Government undertook to ensure nobody with a pension of more than €60,000 would be able to benefit from pension tax relief. Unfortunately, that has not been the case. Many people with pensions in excess of that figure are still benefiting from tax relief.

I welcome the Minister's thinking on the need for the State pension to become the mainstay of the pension regime. We need to move from the huge cross-subsidisation that exists at present, which ensures those who are better off in society, by and large, are subsidised by people on much lower incomes. The entirely unfair regime that is currently in place is yet another regrettable example of how private sector pensioners are being denied the kind of protection they should be receiving from the State. I am happy to support the Bill in that context.

I would like to share time with Deputies Eugene Murphy and Fiona O'Loughlin.

Is that agreed? Agreed.

I congratulate Deputy Willie O'Dea on proposing this Bill, which will provide greater pension protection for employees and ensure solvent employers are not able to walk away from their obligations. In 2014, an OECD report highlighted the need for beneficiaries to receive greater protection when defined benefit schemes wind up. According to the OECD report:

Another weakness of Irish legislation is that it allows healthy sponsors to "walk away" from DB pension plans, shutting them down, without creating a high-priority debt on the employer, as is the case for instance in the United Kingdom. Under the UK's "debt upon employer obligation", the sponsor's debt (if the plan is underfunded) is determined by valuing the benefits on the basis that they are bought out in full via immediate annuities (for pensioners) or deferred annuities (for non-pensioners).

The Minister needs to get real on this issue. He has indicated during Dáil debates that he has no plans to introduce legislation, even though it is abundantly clear that legislation is required and has been for some time.

Many company employee schemes have been wrapped up by employers. I am sure other companies are licking their lips as they watch what is going on in cases like Waterford Crystal, Aer Lingus and Independent News & Media and wonder what is going to happen. That is why legislation is needed. Defined benefit pension schemes have been in funding crisis for a number of years. Many schemes do not meet the required funding standard because of the worldwide market turmoil since 2007. It is reported that 30% of Irish schemes do not meet the funding standard. Other causes of this shortfall include increased life expectancy, the increased cost of buying annuities for pensioners and the rate of increase of final salaries. In essence, the projected assets do not meet the projected liabilities. As a result, many defined benefit schemes have been closed off to new members.

The Bill aims to address the issue of solvent companies closing defined benefit pension schemes to the detriment of scheme members. At present, Irish legislation does not require an employer that initiates the closure of a scheme to ensure it is brought to a level of full funding, as is the case in the United Kingdom. Under-funding is a debt which can be legally enforced. Our view is that profitable firms should not be allowed to walk away from defined benefit schemes. I hope this legislation is not too late. I congratulate Deputy Willie O'Dea on its introduction.

I join Deputies Eamon Scanlon and Mary Butler and other Members of the House in commending Deputy Willie O'Dea on bringing this Bill before the House this evening. Anyone who knows Deputy Willie O'Dea will be aware that he has studied this issue well. He has done his work on it. We have all seen what has been happening to workers in recent times. I am sure workers who have made contributions are asking themselves why they are suffering. We are now seeing people who were fortunate enough to have had jobs all their lives having to sign on at the age of 65 until they reach the pension age of 67. Workers are the victims in these schemes. It is totally unacceptable that honourable workers have lost out on pension funds into which they have paid. The last Government did untold damage to such workers.

The closure of defined benefit pension schemes by large solvent companies must be addressed. We have seen a number of companies winding down defined benefit schemes to the detriment of their workers. This legislation seeks to ensure companies that are in a healthy state live up to their responsibilities. We accept that companies can get into difficulties. Many companies that are in a healthy state should not be allowed to avoid their responsibilities. My colleagues have mentioned Independent News & Media. Deputies Mary Butler and David Cullinane spoke about Waterford Crystal workers. Many people who have made major contributions to this country's economy have suffered as a result of what has happened. Profitable companies must be prevented from winding up their defined benefit schemes.

I was disappointed to read through the document that was circulated by the Minister, Deputy Leo Varadkar, this evening. As Deputy John Brady said, the Minister's document gives the impression that there is not much he can do. Every page of the document is very negative towards workers. I have to say it is not the stuff of a would-be Taoiseach. I hope the Minister does not mind when I say that. He more or less said he could not do anything about these problems. He contradicted himself in one respect. I suggest he acknowledged that there are problems in this regard when he said:

Further steps can and should be taken regarding the funding standard. Following discussions between my officials, the Pensions Authority, the Society of Actuaries in Ireland and the Irish Association of Pension Funds, the Pensions Authority will shortly bring forward proposals to allow some additional flexibility for defined benefit schemes and to tackle some of the difficulties with the current operation of the standard. I intend to consult employer and union representatives on these proposals before making any changes.

However, he concluded by telling the House with regret that he was unable to support the Bill.

It is quite clear from what has been said this evening by Deputies on all sides of the House that the Government will lose a vote on this Bill on Thursday if it does not reconsider its approach in this regard. This matter must be addressed because workers throughout this country are being treated most unfairly. I emphasise that companies that can live up to their responsibilities from a financial perspective should not be allowed to use the back door to evade those responsibilities. I fully commend Deputy Willie O'Dea on the introduction of this sensible and reasonable Bill. This is no more than what we should be doing for workers up and down this country who deserve these protections. We should not let them down.

It used to be said that death and taxes were the two certainties in life. It is very clear that is there is now another certainty. Thankfully, people are growing older and living longer and healthier lives. There is no doubt that as a result, people need to put pension plans in place to ensure they have adequate finance in place when they are not working, when they are older or when they cannot work to ensure they can support themselves to a reasonable living standard. It is more important than ever for public and private pension schemes to be robust.

It is very clear from what Deputy Willie O'Dea said that legislation needs to be brought forward to address the situation where a profitable company can close down a defined benefit pension scheme while the scheme is in deficit. This is to the detriment of existing and deferred pensioners, of whom there are 650,000 in the country at present. In the last Dáil, Fine Gael had a very poor record in regard to private pensions and the last Government passed legislation to allow the Government to raid the private pensions of citizens. Now, it is refusing to act to protect other private pensioners.

We have seen very profitable companies wind up defined benefit pension schemes, which has left workers with nothing. This situation is unacceptable and needs to be addressed and it can be addressed through the Bill Deputy Willie O'Dea has brought forward. The 2014 OECD report highlighted there was a greater need for protection for beneficiaries. The report stated: "Another weakness of Irish legislation is that it allows healthy sponsors to ‘walk away’ from DB pension plans, shutting them down, without creating a high-priority debt on the employer, as is the case for instance in the United Kingdom." There is no doubt defined benefit pension schemes have been in a funding crisis for a number of years and some 30% of schemes in Ireland are reported not to meet the funding standard. It is our view that profitable firms should not be allowed to walk away from a defined benefit scheme.

A completely different set of priority rules will apply on the wind-up of a defined benefit scheme where the employer and the scheme are both insolvent, that is, where there is a double insolvency. In this scenario, all beneficiaries of the scheme are to receive 50% of their benefits, including post-retirement pension increases.

I thank Deputies for their contributions to the debate. It has been informative and helpful to have a detailed debate around the issues relating to defined benefit pension schemes, which have over 660,000 members in Ireland. The problems of defined benefit pension schemes involve different issues which interact and require diverse potential policy responses. Due to demographic, economic and financial factors, the cost of providing benefits has increased at a rate that has not been covered by the investment returns earned by pension schemes. Unfortunately, there are no simple solutions to these issues. These problems are not unique to Ireland. As we have seen from BHS and Tata Steel in the United Kingdom, even the existence of debt on the employer and a pension protection fund have not prevented problems from happening. The key objective for all of us is the same, namely, to ensure that scheme members are protected in so far as is possible while maintaining the balance between the key stakeholders of the members, the sponsoring employer and the trustees.

I would like to reiterate some of the points made earlier by the Minister, Deputy Leo Varadkar. The imposition of both a pension protection fund and a debt on the employer was considered thoroughly a number of times in recent years due to the problems encountered with defined benefit schemes. There are clear advantages to such proposals, but there are also strong reasons they are not desirable. A pension protection fund may impose additional costs which lead to defined benefit scheme closures; it may lead to unintended consequences, for example, the under-funding of pensions in advance of liquidation; it may result in riskier investment strategies; it may increase pension benefits rather than wages in companies at risk; it may lead to the early retirement of directors taking substantial benefits; it may make stronger companies cross-subsidise the weakest; it may drive companies overseas to avoid paying; it may be prone to economic cycles - for example, in a downturn, it is exposed to significant demands which it may not be able to meet; and it may be administratively complex and costly.

A debt on the employer may threaten the company's financial stability and, in some circumstances, render employers insolvent; it may impact on the company's creditors; it may impact on company debt, investment and growth and the employers' ability to raise funds; it may give a competitive advantage to employers which never provided a pension and those with "risk-free" defined contribution schemes; it may prompt well-funded schemes to wind up to avoid future debt; it may need complex and costly structures to administer such arrangements; and it may result in increased and detailed State involvement in sponsoring employers' business decisions.

The changes that were made in recent years to the Pensions Act had the central objective of making the situation more sustainable and these changes have provided a level of stability. Rather than implementing a solution of putting a debt on the employer with unknown consequences, the approach taken to date is to support schemes to gradually move to a better funding position using regulation and the benefits of a strengthening economy. Changes such as the pensions insolvency payments scheme, sovereign annuities, the introduction of a risk reserve and allowing for the restructuring of scheme benefits are all measures which have been introduced with this approach in mind.

I understand the intention behind the Bill is to alleviate the issues that are continuing in defined benefit schemes. Nobody thinks it is right for sponsoring employers which have made commitments to walk away from their obligations. However, the position is not as black and white as that. There has to be fairness in the playing field between employers which have provided well for their staff over the years by contributing to a good pension scheme and those which have not. There has to be a balance between an employer being able to continue to operate and keep employees in jobs and living up to pension commitments made to those employees and former employees. In any legislation, there is a danger of unintended consequences, so any changes need to be carefully analysed and crafted, and followed by a thorough debate on proposed changes.

It is worth recalling some of the dangers and possible unintended consequences of the Bill. Rather than being protected as they are currently, the Bill could expose existing pensioners who are already retired to having their pensions cut substantially in the event of a wind-up. In some cases, stopping a pension scheme from winding up or "extend and pretend" will result in a far worse outcome for some scheme members, particularly younger ones. The scheme would have to continue with solvency potentially deteriorating, and older members using up the assets before younger members retire. The extra funding burden would accelerate the closure of defined benefit schemes in the private sector. Therefore, the result of such a change, designed to protect the position of defined benefit pension members, would be the opposite of that intended. Few, if any, such defined pension schemes would remain. It could jeopardise the viability of the business and the jobs of those employed, given employers lack of capacity to absorb this extra cost. In such cases, people could lose their jobs long before becoming eligible for a pension. It could encourage imprudent investment behaviour by trustees and any losses would have to be made good by the employer.

Pension reforms impact not just on what is happening now but can have huge repercussions on outcomes for people for decades to come. The Minister will in the near future bring forward proposals to address certain aspects of the funding standard for defined benefit schemes. This will include looking at annuity costs in funding standard calculations, perhaps providing additional flexibility for schemes where funding proposals have gone off track, and taking account of employer commitments to support their defined benefit schemes. These will be carefully thought out and fully analysed to help support schemes and their members.

I assure Deputies that the Government is very conscious of the issues raised in the Bill. The over-riding priority for the State in this area is to ensure pensioners and members of pension schemes are protected and the future viability and sustainability of their schemes is ensured and made safer. I hope Deputies now understand why the Bill is being opposed and that the changes proposed would do more harm than good.

The Minister of State has just stated: "The over-riding priority for the State in this area is to ensure pensioners and members of pension schemes are protected and the future viability and sustainability of their schemes is ensured and made safer." We all share that objective but the Government keeps long-fingering it, which is no comfort to those pensioners in schemes where the management is making decisions such as those made by INM, and also by Waterford Crystal way back, when the same dangers about which Deputy Mary Butler spoke were evident. Nothing was done then to change the law, or only very small changes were made, yet this is the same law that allowed INM and many other companies to do this.

The point about the INM case is that it helped to articulate what is happening in many smaller companies throughout the country and what has happened to many thousands of people, yet we still have not put the protections in place and we keep pushing it out for another six months. I do not know what it is about this Government's attitude to Deputy Willie O'Dea's legislation. We were here ten days ago discussing Deputy Willie O'Dea's issues around the fair deal scheme and the Minister of State, Deputy Helen McEntee, wanted six months to deal with them. Tonight, the Minister, Deputy Leo Varadkar, has committed to having a report from the Pensions Board within six months. Many people do not have six months because decisions are going to be made about their futures.

This is increasingly a country where people do not want to get old because they no longer have the guarantees that were associated with a working life, with putting in the hours, with doing the days and the nights, and, at the end of it, having a pension to look forward to, which was paid at age 65 years. We have given that up in recent years and people no longer even have that guarantee.

The worst possible thing has been happening. People have not been given the chance to put the pot back together. This is the pot that they did nothing to destroy. People in their 60s are being told that nothing is available or that what is available is only minimal. They do not have the chance to put the pot back together, even though they did not destroy it in the first place. Then they end up coming to the State.

The Minister has spoken on many occasions about this as one of the greatest challenges facing the country, yet his Department keeps asking for more time. We do not have time. I regret that the Minister has decided to oppose the Bill. Deputy Willie O'Dea has been working on this for approximately 18 months. This is not something he has come to only lately. The Minister might disagree with Deputy Willie O'Dea's politics, but he cannot disagree with his technical knowledge and understanding of pensions and accountancy. It is regrettable that the Minister has decided to oppose the Bill rather than allow it to go to Committee Stage, where he could take the ideas of Deputy Willie Penrose on board. Deputy Willie Penrose has some good ideas and has done much good work. The Minister should try to come up with a shared ambition on Committee Stage around pension protection.

We are almost one year on from the general election and one year into new politics. I am sceptical about it and unsure whether it is delivering. However, it might start tonight. The House has said that we need to do something about pensions. The Government disagrees and suggests that it needs more time. The House is about to say that we want something done about pensions on behalf of the people who put us here, on behalf of the people who are being left without a pension or a scheme. The same people see those in management in these companies going off with big packages. I am not suggesting this Bill is the perfect article. Let us consider what happened in the United Kingdom with the Arcadia Group. That was one of the worst cases. We need to ensure the same thing does not happen here.

The Minister also has responsibility for another aspect of pensions. I am referring to women who have paid pension contributions over the years and who took time out of work to raise families or to go back into the home. These women have been left short in their pension as a result. They have been penalised for having taken time away from the workplace to rear a family. They were not penalised by the Minister but by his predecessor, the former Minister, Deputy Joan Burton, in one of the cruellest actions of the last Government. This is only now becoming apparent as women are coming to retirement age or pension age. They find they are being fleeced by the State for doing the job of the State on many occasions, either by caring for children or parents. We have all seen it. Any Deputy worth his or her salt has met it on a daily basis. We have to do something about it.

It is regrettable that the Minister is opposing the Bill. However, the will of the House to deal with pensions as a matter of urgency will prevail. This is the first time that new politics might deliver for the people outside the House. We should let the committee deal with the concerns expressed by the Minister as well as with the inputs from Deputies Willie Penrose and John Brady. The Minister should allow Deputy Willie O'Dea to work on this issue on an all-party basis with the roadmap he has laid out.

I thank everyone who has contributed. I thank those supporting the Bill, including Deputies Róisín Shortall and John Brady. I thank Sinn Féin, AAA-PBP and, needless to say, my colleagues.

Deputy John Brady made a particular point. I tabled an amendment as long ago as 2014. I tabled it again in 2015. On each occasion the Government shot it down. The amendment was along the lines of what is contained in Deputy John Brady's Bill. I mean no disrespect. Having studied the situation in the United Kingdom closely, I decided to bring in a moderated version of the Bill because of the difficulties I saw with it. I did not know about them until I got time to study it. Having done that, I prepared the Bill.

I am aware that Deputy John Brady has prepared a Bill and that Deputy Willie Penrose has prepared another Bill. Fianna Fáil is taking Private Members' time tonight. We decided this was the issue we would raise during Private Members' time. It does not really matter to me which Bill comes first. If the Sinn Féin Bill or the Labour Party Bill had come first, we would have supported either of them equally because we support the principle. I am willing to work with my two Opposition colleagues in advance of the legislation the Minister intends to bring forward sometime in March. However, I do not have great expectations for that legislation, judging from the attitude of the Minister at Question Time last week, as well as tonight. I find his position somewhat strange in view of the fact that I remember the time when the entire country was discussing the situation at Independent News & Media. The Minister and I were in RTE on a television programme. The Minister proceeded to tell the nation that he was so concerned he would rush to the High Court the following morning and intervene through the Attorney General or whatever. I wonder what became of that intervention.

I appreciate the fact that the Minister recognises that something has to be done about the minimum funding standard. He is proposing to do precisely what I have suggested in section 4.

I must confess to being disappointed in respect of the other matter. We are not talking about something new. We are not reinventing the wheel. This type of legislation has been in existence in the United Kingdom for the past 21 years. When it was introduced in the United Kingdom in 1995, that country was in the teeth of a vicious recession. This was at the end of the Thatcher Government of the late 1980s and the early 1990s. There were problems with deficits. Schemes were under pressure. All the arguments were trotted out. The UK Government at the time, in its wisdom, decided that the best thing was to ensure the balance of advantage lay with protecting the member or the person who had paid into the scheme as opposed to being overly concerned about the employer. Numerous debates and discussions have taken place in the United Kingdom in recent years. Some have argued that section 75 protection, which we are seeking to give in this Bill, should be withdrawn. Arguments were made in favour of it by some – there are several arguments in favour of it. Counter arguments were made by others. The preponderance of opinion on all sides, including the Tory Government at the time, was that the balance of advantage should lie with the need to protect the workers.

The Minister's argument seems to be reduced to a simple position. He sets out the familiar arguments on both sides. Then he takes the side of the employers. He takes the side of the people who walk away. This means solvent employers can walk away from pension schemes that they have let run down to the detriment of their employees. It is simply a question of what people believe or what side they wish to take.

I have been surprised by some of the language used in the Minister's response. He has made reference to no readily available accurate consistent measure of solvency. Has the Minister ever heard of bankruptcy law? The courts are adjudicating every day of the week. Accountants are adjudicating. Liquidators are adjudicating on whether a company has become insolvent. The Minister made reference to there being no connection between a company being solvent or having net revenues at a given point in time and that company's ability to fund a scheme for the long term. Having worked for several years in the largest accountancy firm in the country, I am fully aware of the position. I can inform the House what it is: all that is meaningless jargon. I think it was Oscar Wilde who said that sometimes one excuse is more believable than several. I am disappointed with the Minister's response. We will be pushing the Bill to a vote on Thursday.

Question put.

In accordance with Standing Order 70(2), the division is postponed until the weekly division time on Thursday, 9 February 2017.