That leave be granted to introduce a Bill entitled an Act to amend the Pensions Act 1990, and to provide for related matters.
The purpose of this Bill is to enable the Legislature to deal effectively with a recent phenomenon that is gathering pace whereby companies are winding down their defined benefit pension schemes. Such serious action is mostly unwarranted and highlights the need for the pension rights of workers to be resolutely defended and protected. It is clearly wrong that shareholders can profit from a corporate restructuring while employees are effectively thrown under the bus and have their pension entitlements reduced. Their rights are being trampled into the ground and this malaise will continue to spread unless arrested by legislation. There are more than 700 defined benefit pension schemes in the State, covering more than 100,000 working people. Those workers thought they had made provision for their retirement and many must be seriously alarmed at the nature and extent of the precedent that has been set. It is, moreover, a dangerous precedent from a public policy perspective because it deters workers from saving for their retirement, something which is being universally encouraged at a political level. The prospect that workers' lifetime savings might be drastically reduced at some future point militates against that. The net result will be to force more people into reliance on public provision.
The pensions regulation regime in the UK has diverged from ours in many respects. In the UK, the law prevents solvent companies from walking away from their obligations to their employees' occupational pension scheme. At present, accounting standard FRS 102 requires an employer to recognise its liabilities to a pension scheme in its financial statement. Removing those liabilities from an employer's accounts can have a transformative effect. However, an employer's obligation to its pension scheme is not governed by statute law in Ireland but by the terms of the pension trust deeds, which the employer itself will have drawn up. As a result, there is rarely a binding obligation. In fact, most defined benefit trust deeds allow the employer to wind up the pension scheme and cease contributions, while ignoring any deficit in the funding of the scheme and the resulting inability to pay out the benefits originally promised.
The Bill I am bringing forward seeks to amend the Pensions Act 1990 by adding to employers' obligations in respect of funding issues, including when a defined benefit scheme is being wound up or when the employer has not become insolvent, or both. There is no point in the Government talking about a universal pension provision scheme if people see those who have saved for retirement all their working lives having their pension pots slashed in the unilateral fashion we have recently seen. There are currently three pensions (amendment) Bills before the House. I propose that Deputy O'Dea, Brady and I work together with representatives of the Irish Congress of Trade Unions to formulate a policy that will evoke a positive response. Deputy O'Dea has already indicated he is willing to pursue such an approach.