Vol. 236 No. 9
I move recommendation No. 9:
In page 4, between lines 21 and 22, to insert the following:
“Amendment of Pensions Act, 1990
4. The Pensions Act,1990 is amended by inserting a new section 48A as follows:
“48A. An appeals mechanism for pension scheme members shall be put in place where trustees have decided upon reduced benefits for members, and such appeals mechanism shall ensure that any category of such pension scheme members have not been unfairly treated in any restructuring arrangement.”.”.
I move recommendation No. 11:
In page 4, between lines 21 and 22, to insert the following:
“Amendment of Pensions Act, 1990
4. The Pensions Act, 1990 is amended in section 50 by inserting the following after subsection (1D) (inserted by the Social Welfare and Pensions (No. 2) Act 2013) as follows:
“(1E) A reduction in the preserved benefits for members with accrued service in excess of 20 years referred to in subsection (1B) shall, subject to subsection (1F), be made as follows:
(a) where the annual amount is €12,000 or less, no reduction shall be made from such annual amount;
(b) where the annual amount is greater than €12,000 and is less than €60,000, the reduction in such annual amount shall not exceed 10 per cent;
(c) where the annual amount is €60,000 or more, the reduction in such annual amount shall not exceed 20 per cent.
(1F) Where—
(a) the reduction referred to in subsection (1E) would result in the annual amount being reduced to less than €12,000, that reduced shall operate to reduce such annual amount to €12,000, and
(b) the annual amount is €60,000 or more and the reduction referred to in subsection (1E) would result in such annual amount being reduced to less than €54,000, that reduction shall operate to reduce such annual amount to €54,000.”.”.
I move recommendation No. 12:
In page 4, between lines 21 and 22, to insert the following:
“Amendment of Pensions Act, 1990
4. The Pensions Act 1990 is amended by substituting the following for section 50(3)(a)(i)(II) (inserted by the Social Welfare and Pensions, Act 2009) as follows:
“(II) members whose service in relevant employment has ceased and who have not reached normal pensionable age and who have an entitlement to a preserved benefit of less than 20 years or any other benefit under the scheme.”.”.
I move recommendation No. 13:
In page 4, between lines 21 and 22, to insert the following:
“Amendment of Air Navigation and Transport (Amendment) Act, 1998
4. The Air Navigation and Transport (Amendment) Act 1998 is amended by inserting a new section 32A as follows:
“32A. The IAS Scheme shall not be allowed to close its pension scheme except where the scheme has reached a minimum 90 per cent funding standard.”.”.
I move recommendation No. 14:
In page 4, between lines 21 and 22, to insert the following:
“Amendment of Air Navigation and Transport (Amendment) Act, 1998
4. The Air Navigation and Transport (Amendment) Act 1998 is amended by inserting a new section 32A as follows:
“32A. The IAS Scheme shall not be allowed to close its pension scheme except where all pension scheme members are treated in an equitable manner on the winding up of that Scheme.”.”.
We are predominantly dealing with the section that deals with pensions. What we have endeavoured to do, including when debating this yesterday, was to bring some fairness into the process and try to reverse some of the changes, which date right back to 2009. It was unfortunate that the Tánaiste, Deputy Joan Burton, chose yesterday not to answer some of the specific questions I put to her. However, one thing I said to her was that I agreed that the changed Social Welfare Act in 2009 was not helpful at all and has led to some of the problems with regard to Aer Lingus. Nonetheless, the changes since have further exacerbated the situation. The Social Welfare Bill last year and the State Airports Bill which was enacted extremely quickly effectively give the trustees unilateral power to make any change they want and go ahead with section 50.
There is one point I ask the Minister to consider. It is constantly said it is the trustees who made the decision and I know that, legally, that is the case. However, the reality is that the Government was complicit in this because it brought forward the legislation to enable the trustees to make these changes. In addition, the Government - that is, the taxpayer - is a 25% stakeholder, and the taxpayer voted to make these changes at the Aer Lingus EGM on 10 December. Everything was teed up, all the way along the line.
I want to correct a point made by the Minister yesterday, when she referred to long-standing mismanagement of the scheme. While I agree with this, I ask the Government to reflect on the reason that deficit in the pension scheme doubled in nine months. I will explain why that happened. It doubled because, 18 months ago the Minister flagged what was going to happen with pension schemes and gave employers like Aer Lingus and the DAA the opportunity to change, whereupon they actually stopped paying new contributions into the scheme, starved the scheme of money and ran it down so it was insolvent. That is effectively what happened and it is what is going to happen all over the place. I ask Members of the Oireachtas and the Minister of State to watch this because it is going to happen; in fact, it is happening already. Unfortunately, what the Government, in particular, has done is that it has, for the first time, legislated to change a specific private pension scheme through the State Airports Act which it brought forward.
There is an irony. All of us welcome the agreement reached with the Waterford Crystal workers who were very badly done by. Let us not forget this was a double insolvency, meaning that it was an insolvent company and an insolvent pension scheme; therefore, something had to give. I am delighted the workers have had some recourse. In the instance of the IASS, however, there is a profitable employer and an insolvent pension scheme, yet many of these workers will be worse off than the Waterford Crystal workers. While this is not to put one worker against another, how is it that the Waterford Crystal workers' extra payments, which they are due and entitled to, are going to be paid for? They will be paid for - the Tánaiste was on radio about this - through a levy on defined benefit pension schemes. Anyone looking at this will see that the people in the IASS are effectively paying a levy in order to pay for the Waterford Crystal workers' additional pension rights and entitlements. That is what is happening.
The whole manner in which this has been done is questionable. If there is a social welfare Bill next year under the Government, I sincerely ask the Minister of State to look at some of the recommendations we put forward in good faith. I know that, at times, things have got heated during debates with the Tánaiste, but I feel passionately about what is happening to these people. It is not just a piece of legislation. These changes that have been made in recent weeks, and which are being rejected here, are all having a real effect on people. From 1 January on, 70, 80 and 90 year olds are going to lose six weeks pay from their pensions and, on a point with which Senator David Norris is very familiar, people who are due to retire with 37 or 38 years of service are going to have their pension entitlements cut by 60%. No one can tell me that is fair.
I thank the Minister of State, Deputy Kevin Humphreys, for being attentive to these matters when he has been in the House. Thatr is not the end of it. The State will end up in court over this issue. To move away from that specific scheme, given what is being done here, we will see employer after employer moving along the lines in order to be able to wiggle out of pension liabilities and reduce costs to their companies, thereby making the companies more profitable. All of this is going to happen and it is happening already in pension schemes. I am aware from my previous life that people are saying: "Why would I have this type of scheme? I will wind the scheme down, put people into an inferior scheme and write off whatever I owe."
I thank the Minister of State for his attention. I am very disappointed with the fact we have not been successful, but it is not the end of the matter. I know that people will be taking legal advice on their own positions. Next year, probably, we will have another judgment from the European court on how these 15,000 workers were treated by the Government.
I support Senator Darragh O'Brien. It seems grotesquely immoral that a company should be in profit and wind down a pension fund. I can see no moral justification for this whatever.
That is all I wanted to say. I thank the Minister of State who has been very attentive. I believe he has taken on board the principle of a number of the issues we have been raising, although perhaps his hands are tied.
I thank all of the Senators who have contributed to the debate on Committee Stage. I personally have found it quite informative. I always enjoy coming to the House and think it a very worthwhile experience.
I totally accept that Senators Darragh O'Brien and David Norris put their amendments in good faith. I met the members of the particular schemes and see the real cash loss, which is extremely difficult for them. The one thing I have learned through this whole process is that the whole of pensions legislation is extremely complicated and it is difficult to frame legislation without unintended consequences. Dating back to the original legislation, there has been a series of unintended consequences. Senator Darragh O'Brien noted there would be another social welfare Bill. I will certainly be attentive and will look at it in coming through. I look forward to discussing it with the Senator, even outside the House. I totally accept the good faith of the vast majority of Senators in the debate. I thank them for their contributions and look forward to working with them in the coming year.
When is it proposed to take the next Stage?
At 6.30 p.m. this evening.
Is that agreed? Agreed.
