I welcome the Minister and his officials. Shall we agree the programme for the day or leave it for the moment?
Pensions (Amendment) Bill, 2001 [Seanad]: Committee Stage.
On an issue of procedure, will the proceedings of Committee Stage be published on the website or will they be available tomorrow and, if so, at what time? If the Bill is going into Report Stage next week, which we hope it will, there must be an opportunity for Members to see the transcript of Committee Stage before drafting further amendments.
We will try to verify that during the day and will let members know.
That is important. People who live a couple of hundred miles from here find it difficult to be here at certain times.
We are not talking about having another meeting tomorrow but about today's proceedings being up on the website tomorrow. The Deputy is safe.
I am sorry. It is usually the Dublin TDs who only live out the road who dictate what happens.
It is too early in the morning for that.
No, it is not. The Chair does not normally listen when I make such comments.
I listen but I do not think the Deputy heard correctly on this occasion.
Sections 1 and 2 agreed to.
SECTION 3.
Amendment No. 1 is in the name of Deputy Broughan. Amendments Nos. 9, 12, 13, 22, 27, 28, 30, 31 and 93 are related and may be discussed together, by agreement.
I move amendment No. 1:
In page 13, to delete lines 38 to 40.
The common thread in all these amendments is to make a requirement on PRSA providers, with regard to contributors, that there would be a duty on them in terms of the performance of investment product which would be based on equities. That was a consistent criticism of the Bill in the debates both in the Seanad and the Dáil. We had a minimal amount of time to debate the legislation in the Dáil - I am not sure if the Chairman got an opportunity to speak on it - and, with perhaps five or six days left in the lifetime of this Dáil, it is irritating that such a significant Bill is being taken in committee effectively under a guillotine. That is not to discredit the staff in the Department of Social, Community and Family Affairs who have done a fine job in bringing forward the legislation and amending it at different stages in response to contributions and submissions received.
Regardless of who among us survives to the next Dáil, we must have a basic determination to ensure that significant issues are dealt with as early as possible by the next Government to give Deputies, and the people we represent, sufficient time to discuss matters. I was still receiving suggested amendments to this legislation up to yesterday, which was too late, so I merely want to repeat that point which I also made at the start of Second Stage. I realise the debate on Second Stage more or less collapsed, but that was because it was lunch time on a Friday and Deputy Wade and other Deputies from around the country did not have an opportunity to make a contribution on the Bill. If the debate had been held in the Dáil over a number of weeks, there would have been tremendous interest in it.
Arising from the debate in the Seanad, my own contribution and some submissions I received was the view that there should be a requirement on PRSA providers to give the fullest information about the location and distribution of equities and their performance and that there would be some sort of accountability in regard to long-term savings investment for pensions. We discussed that in relation to the new stakeholder pension scheme in the United Kingdom, which commenced about six months ago, in that while the availability of this new product is meritorious and hopefully we will make a move towards ensuring that a much more significant proportion of the population has an occupational pension, particularly in the private sector where it has been an ongoing problem, we need to provide for some sort of accountability which is lacking in the Bill. Perhaps the Minister and our civil servants are of the view that giving any kind of financial accountability in terms of these investment products is going too far but we are setting out on a whole new path and we cannot be sure that when the performance of personal retirement savings accounts is being reviewed in five or ten years' time, we will not regret the fact that the particular product did not perform in line with people's expectations.
I note the Chairman has grouped all these amendments together so I presume the Minister does not intend to accept them. My amendment seeks to delete the words that ". . . neither the Board nor the Revenue Commissioners shall . . . have any duty to any contributor regarding the investment performance of a PRSA product". I disagree with that and Senator Ross, in the debate on the Bill in the Seanad, argued for some requirement of accountability and said that in relation to investment performance, that accountability should lie with the Pensions Board.
Amendment No. 9 deals with the reporting obligation of PRSA providers. Paragraph (b) of section 99(1) of the principal Act states:
a return relating to the contributors to its PRSA products which shall include such personal information in relation to each such contributor as the Board may require for the purpose of meeting its obligations under the section 117(1) relating to recording and maintaining statistics of contributors.
I have sought to add on "(c) a detailed report evaluating the performance of all investment portfolios held as part of a PRSA product, including the identification of equities held in respect of each period.”.
Given the volatile performance of stock markets in relation to products linked to equities, the general belief is that there is not sufficient accountability on the part of fund managers. When any of us receives a report on savings which are linked to the stock market, we generally get a blasé account of the performance of the particular product but we do not often know, until it is too late, that the investment was in a particular company over which there were serious question marks and that the share price eventually collapsed with the value of the holding becoming very small. I am sure Deputies have had the experience, as I have had, of a constituent presenting them with an annual or six monthly report on an endowment type policy, perhaps a life policy, and complaining that the promises made to them by the provider of the policy or the broker have not been honoured. We would inform them about the bid price and the other basic details of the linkage on the policy and they realise that they have been involved for a number of years with a stock market that initially performed successfully but which, in the past year or year and a half, has had a rocky ride in terms of such investments.
My amendment No. 9 seeks a detailed report on the performance of all investment portfolios. Amendment No. 12 relates to the Minister's regulations on investment of PRSAs. Section 103(2) of the principal Act provides that the Minister may specify requirements to be complied with in relation to the investment of PRSA assets and such regulations which have a number of conditions. It states that such a strategy will adopt an investment profile consistent with fulfilling the reasonable expectations of a typical contributor respecting the said PRSA product for the purposes of making savings for retirement. Amendment No. 12 provides for the insertion of subsection (b) after section 103(2)(a) of the principal Act, as follows “subject to the provision referred to in paragraph (c), a requirement that such a strategy adopt an investment profile consistent with equalling the best known market indices which measure growth in value of equities, property and other investment products”.
This amendment, as do others in the grouping, seeks to insert a benchmarking system whereby contributors to PRSAs could measure the likely returns on their pension investments by reference to the best known market indices, the FTSE, the ISEQ and the NASDAQ, and also take account of changes in relation to property and other investment products. We have talked about the Minister's desire to develop the concept of the three legged stool of pensions - which I first read about in some of the World Bank reports - including contributory and non-contributory State pensions systems, the occupational system under the PRSAs, and personal pension plans and personal investments, which would yield a good pension income. A benchmarking system should be in place to measure the market performance of PRSAs by reference to the best known market indices.
This concept also runs through the other amendments in my name in this grouping. Amendment No. 13, proposes the insertion of paragraph (g) after paragraph (f) of section 103(3) of the principal Act which states “unit or share prices that are determined with regard for equity between different generations of unitholders or shareholders.” Amendment No. 13 proposes the insertion of paragraph (g) which states “a requirement that investments consistently equal the best known market indices which measure growth in value of equities.”.” I have pursued a similar approach in the other amendments I tabled to Part 2 which deals with the introductions of PRSAs.
Amendment No. 22 relates to section 111 of the principal Act which deals with the preliminary disclosure certificate. Section 111(2) of the principal Act states that a preliminary disclosure certificate shall specify the benefits and the level of them which the person referred to in subsection (1) could reasonably - that is, the PRSA contributor - expect to receive from the PRSA concerned on the expiration of a period specified in the regulations made by the Minister for the purposes of this section and calculated in accordance with those regulations on the basis of projected contributions to be made during the same period and otherwise on the basis of assumptions specified in the regulations. Amendment No. 22 proposes in page 29, line 9, after the word "regulations" to insert the words "and shall include a reference to measurement of growth in value of investments based on the best known market indices".
The same theme runs through amendment No. 27 which relates to section 114 of the principal Act which deals with general disclosure obligations. The amendment proposes in page 31, line 35, after the word "invested" to insert the words "and the report shall make reference to the best known market indices which measure growth in value of equities, property and other investment products". This amendment also seeks to put in place a benchmarking system.
Amendment No. 28 relates to section 116 of the principal Act which deals with the statement of reasonable projection. The amendment states "In page 32, between lines 26 and 27, to insert the following: "(2) A Statement of Reasonable Projection shall measure the current and future value of PRSA products by reference to the best known market indices which measure growth in the value of equities, property and other investment products."." In this amendment I seek to include a benchmarking guideline.
Amendment No. 30 relates to Section 117 of the principal Act which deals with the functions of the board in relation to PRSAs. The amendment states "In page 33, between lines 25 and 26, to insert the following: "(3) The Board shall, from time to time, conduct and publish reviews of the performance of investment fund managers for PRSA products by reference to the best known market indices which measure growth in the value of equities and other investment products.". This amendment requires the board to examine the best performing fund managers and make that information available to possible contributors to PRSAs. Given the experience of some investment products in the past, that would seem to be a reasonable requirement. It requests the board to review the performance of investment fund managers. The point was made on Second Stage that those management teams are often among the best paid professionals in the financial services sector. It is remarkable that we would embark on the introduction of PRSAs without some benchmark in place on how their performance might be measured in relation to PRSA products. When replying to this and my other amendments to section 3, the Minister might say that in addition to the Pensions Board a financial services regulator will be in office at some stage which would also have an impact on this area, but there is still a need to have in place a measurement methodology in regard to this area.
Amendment No. 93 relates to section 42, which amends section 59 of the principal Act which deals with the general duties of trustees of existing occupational schemes. It is part of the amendments to Part VI of the principal Act. There are a number of valuable general duties laid down. Amendment No. 93 inserts paragraph (iii) after the provision that the trustees shall determine in accordance with the rules how those resources are to be invested in cases where the members give no direction. It states:
(iii) determine in accordance with the rules how those resources are invested with reference to the best known market indices which measure growth in value of equities, other investment products, property and gross domestic product;".
That formula should probably have been included in the other amendments as well. The group of amendments seeks to introduce a further level of accountability for the providers of PRSAs and the investments made by trustees of existing schemes.
In relation to existing schemes, we received many submissions in the few weeks before Second Stage about the past poor performance of investments under existing occupational schemes. I am taking the opportunity in this Bill to insert into the PRSAs a series of benchmarks whereby contributors can have a reasonable idea of what value their PRSA might have after 20, 30 or more years.
I have a question about section 1 which provides that the Act will come into operation on the date the Minister may appoint by order. The Minister will accept that a considerable number of regulations will have to be published once this Bill is passed. What length of time will it take to publish the regulations involved?
I have received representations from people in the industry about how long it will take to get the new PRSA regime up and running. Once the legislation is passed by the Oireachtas and the regulations are published, they will go to the society of actuaries for its guidance notes. It is estimated, after the introduction of administrative and IT changes, that the PRSA provider companies will take an amount of time to read through these regulations to see how they work before they dip their toes into the market, as it were. Has the Minister any views on how long it will take to produce the regulations of which there are a considerable number?
The Department and the Pensions Board are already working on the regulations that flow from this legislation. It is anticipated that the Pensions Board will, in effect, be open for business in September to take applications for PRSAs.
Will the regulations will be available by then?
Yes. They are being prepared.
There will be a lead-in time so providers can examine the regulations being proposed. Amendment No. 31 assigns a new function to the board. The new functions of the board, which are consequent on the introduction of these new products, are clearly outlined but I believe it would be useful to add another function. The board is an expert body which has proved its mettle and worth since it was established some years ago. The function I propose to add is that it acts as an assessor of PRSA products.
At present, if somebody is selling a product of any description, be it life insurance, savings bonds, etc., the company is the agent and it outlines its own performance. It would be useful if the board had the function of issuing a statement of opinion as to which providers are doing well by comparison with others. Obviously, this would take a number of years to implement because the legislation is only now being introduced and it will take time to assess who is and is not doing well. However, I agree with Deputy Broughan that some form of independent assessment of the performance of products is needed. It is not good enough to leave it to the companies or their agents to sell the product.
We regularly see providers, who are trying to sell their products, compare their performance with four or five other competitors in the sector. Frequently, however, those comparisons are unreal. There is a need for independent assessment of performance and this would be a useful function to add to the new functions the Minister proposes to assign to the Pensions Board. In this day and age we should not rely entirely on evidence from the industry. There should be an independent assessment and the Pensions Board is the right independent assessor to carry out that task. Amendment No. 31 and the other amendments put down by Deputy Broughan are useful in respect of providing a benchmark as to how products are performing in the market.
I thank the Deputies for their forbearance in bringing this legislation forward. I appreciate the Bill is being rushed but time is short. The Bill has been in gestation for some time. It is probably the most complex Bill to have come before the Oireachtas and, indeed, any Department in recent years. I am not making excuses but, in the context of the priority given to legislation going through both the parliamentary draftsman's office and the Oireachtas, other Bills have taken precedence, such as Bills in relation to emergency powers vis-à-vis Northern Ireland and following 11 September. They interfered with the timetable for this legislation which, unfortunately, means we are dealing with a complex Bill in a relatively short time.
On the other hand, there are a number of net issues in the Bill which can be encapsulated into five or six topics. That was the case in the Seanad and, as a result, a clearer Bill was brought before the Dáil. This is an agreed Bill and the vast majority of the people involved in this area, from one perspective or another, are supportive of its being passed quickly. It is the result of a partnership process under the national pensions policy initiative. Due to the fact that we were having difficulty getting the Bill published because of a huge workload in the office of the parliamentary draftsman, we published parts of the Bill. I made it clear to the interested parties that we were more than willing to accept amendments and suggestions. There was a sizeable number of submissions and we took many of them on board. That is another reason the flow of the Bill through the Oireachtas was somewhat less than satisfactory. I thank the Members of both Houses for their forbearance.
Under the PRSA framework set out in the Bill, issues in relation to the investment of the PRSA assets are a matter for the PRSA provider. The provider will be required to have a default investment strategy for each of the PRSA products which will be linked to good practice for investment for retirement. The provider will be required to be certified by a PRSA actuary as regards compliance with statutory requirements in relation to the PRSA products. The purpose of the default investment strategy is to take account of the fact that many people, whom we hope will take up PRSAs, will know little or nothing about investments and do not wish to. They want to be happy that they have a relatively harm free investment that they can take out in an off the shelf manner.
There are, however, no guarantees with investments. That is a well-trodden path. This is the purpose of the various disclosure requirements whereby the PRSA provider has to give the contributor regular updates of his or her pension investment mainly through the statements of reasonable projection and the actual value of the investment at a particular time. The PRSA framework clearly puts the duty of care in this regard on the PRSA, provider which is the correct approach. It would be neither possible nor appropriate for the Pensions Board or the Revenue Commissioners to underwrite or guarantee the PRSA investment in some way. That is made clear in section 92(2)(b) which Deputy Broughan wishes to delete. There is a theme running through this group of amendments that the Pensions Board should become more active in the area of monitoring investment performance in PRSAs. There is also a reference later to pension schemes generally. I agree this is an area that merits further detailed examination and it is an issue that is on the policy agenda of the Pensions Board for this year. The board is looking at this aspect. This is also an issue that is being examined at EU level in the context of the draft directive on the activities of institutions for occupational retirement pensions. In fact, there is a meeting today of the working group examining this directive, at which my officials and the officials of the Pensions Board are attending. Future policy will be very much influenced by developments on this directive which we must await.
If it transpires that it is not possible to make progress at EU level we will have to look at the issue nationally. I will undertake to have this matter discussed by my Department with the board in due course. It will be important that future arrangements build on the fact that the pension fund investment is the responsibility of the trustees in the case of occupational pension schemes and of the PRSA provider in the context of PRSAs, and that this principle is not undermined.
Going forward, I would like to see more transparency in this area through, for example, the introduction of investment principles related, for instance, to the level of risk, portfolio diversification and charging structures. This could be formalised through investment mandates or contracts between the trustees and the pension managers. In this way all involved would be clearer about the position.
I consider that the Deputies have raised valid issues but I have outlined the more appropriate way to address them. Therefore, I must oppose the amendments.
While the Minister has made some good points, with regard to the last few, why could we not have that kind of formula somewhere in Part 2? Could we not have inserted a section laying down principles of investment and proposing a general outline of an investment mandate, and how the contract might be managed? I know the Minister is anxious to get the product up and running and it is good to see that after such a long gestation they will be available in early autumn. However, the fundamental point still remains; the experience Deputies have had over the years with constituents and others concerning the management of certain occupational pension schemes indicates that there is still grave disquiet in this area. People need some sort of mechanism whereby the development of their investment product could be measured over the years. Going back to my first amendment, and before we set out on this interesting new path of occupational pensions, clear rules of accountability for investment should be required of the board under this Bill. Given the history of this matter and the fact that there is widespread disquiet about how some schemes have been managed in the past, there is a possibility that some PRSA providers will develop products that, over time, will not deliver what contributors need.
While the office will be up and running in early autumn and the Pensions Board will accept applications then, it will presumably take a considerably longer period before applications are received. Employers will have to make quite an amount of administrative and IT changes to payrolls in order for the system to PRSA providers to be operational. Therefore, while applications will be received in early autumn there is no guarantee that the product will be available by the end of this year.
The Minister is right in saying that it is not the function of the Pensions Board to give a guarantee about any investment portfolio. I fully accept that but that power should be there if the Pensions Board requests an opinion. We will not review this legislation again for some years. The legislation aimed at introducing the Pensions Board was enacted in 1990. This is the first time we have examined the original Act, apart from one amendment in 1996. It would be useful to give this power to the Pensions Board, although whether it chooses to enforce it is a matter for the board. If an opinion is to be issued some time in the future, who better to do so than the Pensions Board? While I accept that my amendment gives a direct legal force in saying it "shall", it would be useful to have the provision in place if the board chooses to enforce it. I accept the Minister's statement that there cannot be any guarantees in this regard but given the new regulatory role of the Pensions Board in vetting applications, it would make sense to grant it this new power because we are unlikely to review the legislation for at least four or five years.
I thank Deputies for their comments. The Bill is just about PRSAs, and investment is a much broader issue. The Pensions Board is examining this matter generally at a policy level in conjunction with my Department as a result of what has been said during the debate on this Bill. That process will be accelerated by the fact that both Senators and Deputies have now raised this matter. It would be premature, however, to insert anything specifically about PRSAs. We should await developments in that respect but, as I indicated in my original reply, I am not averse to this matter being examined. We are of the view that this area should be looked at once the deliberations of the Pensions Board and the EU have been assimilated. I accept what the Deputies have said. They are not saying the Pensions Board should give a guarantee but, in effect, the Pensions Board would have some liability and a finger may be pointed at it, particularly given Deputy Hayes's amendment that the board should publish an annual report on the investment performance of each PRSA. The board would be inundated with annual reports if it were to do that. It might end up having to do hundreds of annual reports for each PRSA product. Apart from that, the very fact that it would give a report would, in effect, tell people what its view on the performance of an investment is, whether good or bad. I would have thought that is not really the board's remit. It is an open market and not something the board should be asked to do in that it could revert back to the board if the performance did not match up to what was being suggested by the board in the annual report.
As the product develops, will it be the case that PRSA providers will make claims about their products?
Surely.
One already sees that in some investment products where people will say, informally, that their fund manager is better than another or is the best manager and that, therefore, they have got the best returns and are ahead of the ball game in regard to equities and so on. Could this be formalised a little to give people a guarantee that they would have all the information? We are looking for information.
I do not think the board would be adverse to having, in effect, a register of complaints in relation to people claiming something. However, this is an open market. We cannot regulate it. It is like people in shops making claims. At the end of the day the buyer dictates whether the product is a good one. That is what will happen in relation to these as well.
If one looks at the money sections of newspapers, the media is increasingly trying to advise their readers on different types of investment or pension products. To some extent, there is already an informal system of assessment of products. Could we go a step further and place requirements on the board?
It could well happen in the future, if the single financial regulator is established, that this would be a function specifically for the regulator as against the Pensions Board. The Minister referred to the fact discussions are going on at EU level on this. Surely, if we are moving towards one regulator for the entire financial services industry, this function would be given to that regulator, that is, to state opinions on the performance of various products in the market.
I do not envisage that would be the position in relation to pensions. It is a bit like selling houses. Some of the statements made by auctioneers in their efforts to sell houses are somewhat over the top but I do not envisage that people will be fooled in that respect. The people will get the statement of reasonable protection. It cannot be the function of the board to give a view as to whether one product is better than another.
I will withdraw the amendment for the moment. They are all very similar and I may put one of them later on.
Amendment, by leave, withdrawn.
I move amendment No. 2:
In page 15, between line 31 and 32, to insert the following:
"(7) The Board shall prepare, amend from time to time as it considers appropriate and publish widely a Charter of Pension Consumers Rights to include all PRSA products.".
It is a simple amendment which seeks to extend the rights of contributors or potential contributors to PRSA products. I wish to extend the section which deals with the grant of approval, the duties of the board and the duties of the Revenue Commissioners by stating that it should be a requirement of the board to prepare and amend from time to time a code of conduct in respect of the production, marketing and selling of PRSA products by PRSA providers. The idea is that a code of conduct would be extended by having a widely published charter of pension consumer rights which would include all PRSA products.
We are familiar with this as a result of our experience in other areas. Recently in local government, in which many of us are involved, we drew up a charter of consumer rights. In Dublin City Council, we also drew up a code of conduct on how consumers deal with our officials. This amendment seeks to extend the rights of pension contributors by having a published charter. In the principal Act and in the amended Act of 1996, there is such a provision. In regard to PRSAs, I did not notice a clearly laid out charter of rights for pension contributors. This is a useful amendment and I urge the Minister to accept it.
The Pensions Board already has a wide information and awareness role in the pensions area which it undertakes to a very high standard and I compliment it in that regard. The information role includes the provision of information booklets on all aspects of pensions and following the passing of the Bill, it will begin work on a PRSA booklet. In addition, the board attends a large number of seminars and conferences where pensions may be discussed.
That said, I am not convinced that a charter of pension consumer rights to include PRSAs would be an appropriate task for the board, especially given that I said earlier it is the responsibility of PRSA providers and scheme trustees. However, as the Deputy is aware, I am adding a representative of consumer interests to the board. I will obviously ask the board to review the spirit of this proposal in due course.
So the Minister is accepting it.
Amendment, by leave, withdrawn.
Amendments Nos. 3 and 4 are related so both may be taken together by agreement.
I move amendment No. 3:
In page 15, between lines 31 and 32, to insert the following:
"(7) The Board may consider the previous investment performance of the PRSA applicant before deciding upon the application to be approved or refused.".
When I read the Bill, as passed by the Seanad, it did not strike me that the board, in deciding on an application on behalf of a PRSA provider, could take into consideration the previous investment record of the provider in any other guise. This is similar to the previous group of amendments we discussed.
The other issue is compliance. In all issues of financial regulation, we have to be concerned about compliance. If a provider puts forward a product for approval by the board and if the provider in another guise has a very poor compliance record or a very poor investment record, that should be grounds for the board to either accept or reject that application. When I read section 94(1) to (6) on the granting of approval of a PRSA product and the code of conduct, I did not see that included. If the Minister says the board can explicitly consider the issues of previous investment record and of compliance, that is, whether the provider had a poor record of compliance in a former life, before it grants or refuses an application, I will withdraw the amendments.
It is important to make the point that the board will have a key regulatory role in deciding on the applications which come before it and we have to give it maximum powers. It is important in this era of additional financial compliance that one of the conditions would be that the board would consider previous records in relation to compliance.
The intent of this amendment is already covered by the code of conduct that will be drawn up by the Pensions Board in respect of the grant of approval of a PRSA product. These areas will be examined by the board and are already covered in the framework. On the specific issue of the previous performance of the PRSA applicant or provider, obviously there will be no previous performance record where they are starting de novo. All the providers of a PRSA product would already have been approved by the Central Bank and/or the Department of Enterprise, Trade and Employment, so they would have a reasonable track record. When the board deliberates on an applicant’s application it will have to take account of the views of the Central Bank and the Department. What the Deputy seeks will be part of the process. I do not consider that the amendment is necessary in that respect.
Will the opinion first come from the Central Bank?
They would already be approved under the Investment Intermediaries Act.
With regard to the PRSAs, I understand there are dual applications. An application is made to the Pensions Board while a similar one is made to the Central Bank at the same time. Is that the position?
To the Revenue and then to the Pensions Board.
The Revenue submits an opinion to the Pensions Board based on the information it has. Is that the position?
The Revenue is concerned with the taxation position. The Pensions Board has the full say in the approval or licensing of the PRSA provider.
When the provider applies he does so to the Revenue and the Pensions Board. Is that the position?
An application is made to Revenue to obtain a tax clearance certificate or whatever.
We were well briefed by Ms Vaughan and her colleagues on this matter. Is the Minister concerned that the overall approval of an investment company or manager by the Central Bank, the Revenue and the Pensions Board, involving a multi-faceted form of control, could form the basis for future problems? Would it not be better to assign all regulation on pension products, including the complete regulation of the companies, solely to the Pensions Board?
Different views were expressed on this. Following the publication of the Bill we have decided that the Pensions Board should take care of the licensing aspect. That marries with similar legislation, such as the Investment Intermediaries Act and the role of the Central Bank and the Department of Enterprise, Trade and Employment. We will have to see how things progress but we are satisfied that the procedure under which PRSA products are approved by the Pensions Board is the correct way to proceed.
Amendment, by leave, withdrawn.
Amendment No. 4 not moved.
On page 15, section 95 states: "Any person who, in purporting compliance with section 94(1), makes a statement knowing it to be false or misleading in a material particular shall be guilty of an offence." What is the penalty?
It is set out in the principal Act.
I attempted to have the penalty increased but my legal advisers said it is adequate.
I move amendment No. 5:
In page 16, line 40, after "prescribed." to insert "The additional cost to the Board in administering the provision of PRSAs should be met from the fees as described in this section.".
Will the application procedure be self financing to the board? There is a considerable fee attaching to the application. The amendment provides that the additional cost to the board in administering the provision of PRSAs should be met from the fees as described in the section. The board will incur a considerable overall cost at the outset in administering all the applications it will receive. However, will future administration of applications create a revenue stream for the board?
The amendment is unnecessary. The purpose of the fees that will be paid by PRSA providers to the Pensions Board is to meet the cost of the PRSA product approval. The Pensions Board gets a small Exchequer subvention relating to policy issues but the cost of running its day to day business is met by the pension providers who apply to it.
Will it be self financing?
Yes. It may also provide the board with a revenue stream, but that is well regulated for in the legislation.
Is the Minister happy that the board will have sufficient funding to enable it effectively operate from the outset?
The Department of Finance sanctioned additional personnel in view of the increased work undertaken by the board.
Amendment, by leave, withdrawn.
I move amendment No. 6:
In page 16, line 55, to delete "provider," and substitute "provider' ".
This amendment will replace a coma after the word "provider" with an inverted coma.
Amendment agreed to.
I move amendment No. 7:
In page 18, between lines 32 and 33, to insert the following:
"(2) Whenever the Board suspends or withdraws approval of a PRSA product under subsection (1) (other than in pursuance of a request by the relevant PRSA provider to do so), it shall notify contributors to the relevant PRSA provider in writing that the product has been suspended or withdrawn.".
The Deputy may wish to note the penalty provision. On summary conviction it is a fine of up to the euro equivalent of £1,500 and/or imprisonment for up to one year and on indictment, it is a fine of up to the euro equivalent of £10,000 and, or, imprisonment for up to two years.
Let the word go out. Amendment No. 7 deals with the issue of the suspension or withdrawal of a PRSA product. The Minister is aware that the board will have a new power under the Bill to suspend or withdraw a product for a number of reasons. Where the board takes that decision a mechanism should be in place to inform contributors. I am aware that on page 19, subsection (10) provides that the board shall publish the information in Iris Oifigiúil.
Page 18, subsection (4) states: "Whenever approval is suspended or withdrawn by virtue of subsection (1) the relevant PRSA provider shall immediately inform in writing any contributor who may be affected by such suspension or withdrawal of that suspension or withdrawal."
It is a matter for the provider. Is that the case?
Yes.
Amendment, by leave, withdrawn.
I move amendment No. 8:
In page 20, line 34, after "the" where it firstly occurs, to insert "PRSA".
I am happy to accept this amendment. We were going to introduce a similar one. Perhaps the Deputy may wish to put his views on it on the record.
This is to insert "PRSA" before the word "business", and it did not relate specifically to the PRSA product aspect of it.
The Deputy may want to state his views on it so that people know what we are talking about.
This has to do with the reporting obligations of PRSA providers. Section 99(1)(a) of the Bill, as published and as passed by the Seanad, refers to “a report in relation to the business of the provider”. Of course the provider may have a number of businesses but by inserting “PRSA”, it relates the report to the product only. That is the intention.
I am happy to accept that amendment.
I have one question about section 97(1)(d) on page 18. This is about the suspension and withdrawal issue. Section 97 states: “The Board, after, where appropriate, consultation with the Revenue Commissioners, may at any time suspend or withdraw the approval under section 94 of a PRSA product” if the provider “has failed, to a serious extent, to comply with its obligations under this Part or regulations thereunder;”. What is the monitoring requirement? Who would do this monitoring?
It states "if the Board is satisfied".
What is meant by "serious"? Is it serious or really serious?
That would be for the board to decide.
Presumably that will mean there will be a Department charged with this specific responsibility. Who will pay for this? We are giving it a monitoring role.
That is part of its remit already.
Is the Minister satisfied that the personnel will be there to do that?
Yes. There is substantial acceptance that the Pensions Board must take on extra staff and it has already done so because of all this extra work.
This monitoring provision in that section is a huge role.
Yes, but the board does that anyway in the case of existing products.
I just wanted to raise the point.
Amendment agreed to.
Amendment No. 9 not moved.
Amendment No. 10 in the name of Deputy Brian Hayes. Amendment No. 20 is related. We will discuss amendments Nos. 10 and 20 together, by agreement. Is that agreed? Agreed.
I move amendment No. 10:
In page 22, between lines 19 and 20, to insert the following:
"(d) in section 26(1), by the insertion after subparagraph (vii) of the following:
'(viii) PRSA providers who in the meaning of Part X of the Pensions Act, 1990.'.".
This was brought to my attention by industry sources. I welcome the fact that section 26 of the Investment Intermediaries Act, 1995, was amendment on Report Stage in the Seanad to allow restricted intermediaries to sell PRSAs. That was something which was brought to the Minister's attention. Insurance brokers, in particular, can now sell these. They could not do so under the Minister's original proposals.
These insurance brokers in the main can only deal with the defined list of product producers as set out in section 26. Currently the list overlaps with the definition of PRSA providers but if the list of the PRSA providers was amended in the future, it may well imply that brokers would not be able to deal with the expanded list. If, for instance, credit unions were licensed by the Minister in the future, would insurance brokers be able to deal directly with credit unions as intermediaries? It was brought to my attention that they may not be able to do so, given that the Minister has not amended to a sufficient degree the Investment Intermediaries Act, 1995. I understand some industry sources would prefer if the PRSA providers were specifically listed in section 26.
When the Deputy tabled these amendments, we were not sure of the point he was making. That would be covered by the Investment Intermediaries Act, 1995.
Yes, which is referred to in the Bill.
We understood that sections 101(5) and (6) already cover the points made but if there is an additional point——
No. They cover them at present but the difficulty, as I understand it, is that if in the future the Minister changes other organisations who can produce these products, will these insurance brokers specifically be able to act as an intermediary there?
That is a matter for the Central Bank under the Investment Intermediaries Act, 1995. They have a responsibility for implementing that. I would not see that there would be any difficulty but we can have a look at that matter between now and Report Stage.
We will come back to that on Report Stage.
Amendment, by leave, withdrawn.
I move amendment No. 11:
In page 22, line 38, after "provider" to insert "and subject to the condition that the PRSA provider shall provide to the contributor, such functions regarding the PRSA product as he or she requests".
This relates to the idea of measuring the performance of the PRSA product. Originally I tabled this amendment to ensure that the contributor, and the Pensions Board, would have the fullest possible information on a product.
I am not clear on the point Deputy Broughan is making. The amendment states "the PRSA provider shall provide to the contributor, such functions regarding the PRSA product as he or she requests". Perhaps it should read "such information" instead.
In my original draft, I stated that it would give the fullest information to the contributor and the Pensions Board.
We could not understand, looking at the Deputy's amendment, what he was getting at when he included the words "such functions". My advice is that if it were "such information", that is already covered. We will look at that between now and Report Stage.
Amendment, by leave, withdrawn.
I move amendment No. 12:
In page 23, between lines 16 and 17, to insert the following:
"(b) subject to the provision referred to in paragraph (c), a requirement that such a strategy adopt an investment profile consistent with equalling the best known market indices which measure growth in value of equities, property and other investment products;”.
Amendment put.
The Select Committee divided: Tá, 4; Níl, 8.
Tá
- Broughan, Tommy.
- Hayes, Brian.
- Coveney, Simon.
- Upton, Mary.
Níl
- Ahern, Dermot.
- Ahern, Noel.
- Brady, John.
- Ellis, John.
- Foley, Denis
- Killeen, Tony.
- Moloney, John.
- Wade, Eddie.
Amendments Nos. 14 and 15 are related and may be discussed together, by agreement.
I move amendment No. 14:
In page 25, line 13, to delete "5" and substitute "3".
This amendment relates to charges on PRSA products. I tabled it in order that the Minister could explain the rationale used to arrive at the two key charges listed in section 5, namely, that the amount of any particular charge made under a standard PRSA shall not exceed 5% of the amount of a contribution and that the total amount of all charges made to the PRSA assets of a standard PRSA shall not exceed a rate of 1%. That is a significant charge in the context of savings and taxable income. Is there a case to revise it downwards to 3%, thereby cutting the rate on assets to 1%? The Minister pointed out during briefings on the Bill that these charges were set by reference to the best information available on pension products and that it would be fair and equitable if rates of 1% and 5% on assets stood. However, I tabled the amendments to tease out how he arrived at these figures and ascertain whether they could not be a little keener. The tax position would still be positive, but the greatest encouragement should be given to contributors.
The figures were arrived at on the basis of what the market could bear having taken into consideration the views of the Pensions Board, the Department and others. These are maximum charges and we hope competition will ensure they will be much lower. If there is evidence of charges being maintained at 1% or 5% as we move forward, we will have to examine them. The maximum charge on the UK stakeholder pension is 1%. However, it must be borne in mind that there is a greater volume of pensions in the United Kingdom and ongoing debate about the sustainability of companies which receive a 1% charge.
It is a 1% contribution.
Of assets. At the end of the day we are all of the view that the consumer should pay as little as possible, but we must bear in mind the charge that can be borne in a relatively small market. I guarantee it is an area that will be kept under review.
Amendment, by leave, withdrawn.
Amendment No. 15 not moved.
I move amendment No. 16:
In page 25, line 43, to delete "timely" and substitute "two months".
I ask the Minister to withdraw the word "timely". Section 104(11) of the principal Act states, "A PRSA provider shall give timely advance notification to a contributor of any changes to charges proposed." This is open to wide interpretation. What does "timely advance notification" mean? The amendment specifies a maximum period of two months for the information to be submitted. There is no definition of "timely advance notification".
There is not a significant difference between us. "Timely" could be interpreted to mean less than two months. I undertake to examine the matter again between now and Report Stage. The view of the Department is that the word "timely" is better than the term "two months".
Amendment, by leave, withdrawn.
I move amendment No. 17:
In page 26, to delete lines 18 and 19 and substitute the following:
"(3) An employer shall pay, at his own expense, contributions into the employee's PRSA which at least equal the employee's contributions.".
This is a key amendment, which relates to contributions. The Bill states, "An employer may pay at his own expense into an employee's PRSA." The Minister said on Second Stage this could be kept under review. It should be mandatory that an employer makes contributions. Given that under section 787J(2) of the principal Act contributions are tax exempt, there is no reason, therefore, not to place a mandatory requirement on employers in this regard.
It is an achievement that the legislation has been introduced at long last, but the Minister's remit is to encourage people, particularly those in the private sector, to take out an occupational pension. A basic encouragement in this regard would be to clearly set out requirements for employers. Highly salaried staff often enjoy compensation packages, to use Anthony J. O'Reilly's favourite term, which include major contributions by their employers to pension plans. I do not understand the reason the Minister does not grapple with this issue to make it mandatory on employers to make contributions.
This issue could become a significant aspect of wage negotiations in future. My trade union colleagues would have a direct interest in how pension contributions might be framed as a significant part of the overall benefits that a job would confer on an employee. The Minister has an opportunity under this section to take a leap and make the PRSA an attractive element of remuneration for an employee by making it mandatory on employers to contribute also, particularly given that such contributions can be written off for tax purposes.
This is an important issue, to which we referred on Second Stage. I have tabled an amendment, with which we will deal later, where I have tried to formulate a new section to review the contributions after a number of years if a level of cover has not been attained. The Minister said on Second Stage that he expects cover to dip below the 50% level, calculated years ago, when figures for private pensions are published later this year. A specific review mechanism must be inserted in the legislation which would allow us to return to this issue. PRSAs will not work unless there are significant contributions from employers in the long run which may well be part of a future national wage agreement and social partnership. The Pensions Board report in 1998 highlighted a consensus between employers and trade unions on this issue, which was significant. There has to be a specific review mechanism included in the Bill whereby, if a certain level of coverage is not reached within a certain number of years, the issue of contributions will be automatically reviewed. Without a form of employer contributions, we will not obtain the type of coverage we should.
This amendment would introduce a further compulsory element into the PRSA framework in that employers would have to match their employee PRSA contributions. While we would like to see that, I cannot agree to compulsion at this stage. The PRSA framework is an agreed partnership approach to increasing pension coverage. The voluntary approach to employer contributions must be given a chance to succeed. However, if this strategy does not work, and we will know this through the survey work, the position will have to be reviewed. I have tabled amendment No. 37 to achieve this which will allow us to review it. That is as a result of the comments made by Members on Second Stage.
The issue of "mandatory" and "voluntary" was one of the key issues in the NIPI report. All the social partners and participants in the report were unanimous that employer contributions to PRSAs should be voluntary in the initial stages. I have said in many speeches since the report was published that it may well be that, sooner rather than later, we will have to go the mandatory route. The strong view of the participants in the NIPI report was that it should be on a voluntary basis in the initial stages. I am told there are downsides to the mandatory approach in that schemes could reduce their provision to the lowest required, as apparently happened in Australia. That is the reason we want to move slowly on this to see how it transpires. I anticipate that whoever succeeds me will examine this when the review is carried out. If we do not get what is required, we will have to ensure it is mandatory.
I welcome the fact that the Minister is prepared to include amendment No. 37 to provide for a review. The idea of the PRSA is to act as an encouragement to people to make provision while being able to move between employments. Given the tax advantages which would ensue, surely it would be beneficial to employers as well to make as good as possible an environment for workers if there was this requirement of employers.
In the initial discussions on the Bill, what type of response on this did the Minister receive from organisations such as IBEC and other employer bodies? Were people bitterly opposed to it or was it something they saw over the long-term as being part of a normal salary arrangement?
I do not have anything further to say other than what I have said before on the issue of "voluntary" as against "mandatory". It is something which will evolve. Whether it will be necessary for it to be mandatory will depend on the type of survey and review we have indicated in amendment No. 37.
Amendment, by leave, withdrawn.
Amendment No. 19 is an alternative to amendment No. 18 and both may be taken together, by agreement.
I move amendment No. 18:
In page 26, lines 47 to 53, to delete all words from and including "in" in line 47, down to and including "payment" in line 53.
This relates to the minimum contribution which can be made to PRSAs. The amendment proposes to delete a number of lines from the Bill which make a differentiation made between €10 and €50? Why is this differentiation made? The argument is that it is in place for electronic transfer. That said, if we are trying to make this as flexible and simple as possible for people, we should just have one amount and not include this higher amount. The minimum amount per year is €300, which would not give much of a return after ten years. The two minimum payment levels of €10 and €50 are unnecessary. Will the Minister examine this?
I agree with Deputy Hayes's approach. I was trying in my amendment to make it as simple as possible for people to contribute, and I hope I achieved that. We had hoped with the special savings incentive accounts, that the Minister for Finance would have brought forward a new scheme with even lower thresholds or different conditions which would have encouraged people with very low incomes to make some savings provision. I was thinking along similar lines in this case. It should be made as easy as possible, especially given that during a person's career there could be times when he or she could contribute very little and other times when he or she could contribute more. I presume one would be advised by one's provider on this. That was the thinking behind amendment No. 19. I hope it has the effect I intended.
The reason there is a difference is that we have to find a balance between the consumer's perspective and that of the provider. Dealing with cash is more costly to the provider. The payment of €10 is allowed where it is done electronically and I am told the vast majority of transfers will be done electronically, given that they are from wages. That is why it is targeted at a much lower level. If contributions are in cash, they cause more difficulties. I envisage that very few transactions would be in cash, but we cannot exclude those. That is why there is a differentiation. It is not anything sinister.
Amendment, by leave, withdrawn.
Amendments Nos. 19 and 20 not moved.
I move amendment No. 21:
In page 28, to delete lines 33 to 35.
I propose to delete section 110(2) as inserted by section 3 which relates to the marketing and sale of PRSAs. I have received representations from industry sources on this issue. The subsection states that: "No document relating to the marketing or sale of a Standard PRSA may solicit the purchase of, or otherwise advertise any other product". There is a concern among insurance brokers who have made representations to me about this issue. The Bill makes it unlawful to market other products alongside PRSAs. The argument is that this counters good practice in the life and pension policy area, which is to intensify and prioritise protection needs from life cover and income protection. Consumers are adequately protected by the insertion of section 110(1) which states that it cannot be made a condition to take out another product. This makes subsection (2) unnecessary. It may mean that standard PRSAs are marketed at the expense of life cover to the detriment of families of PRSA contributors who may die young. If one sells a PRSA to a younger person who dies young six or seven years later, does he or she have the right to insurance cover which may not be a part of the PRSA? Is it good practice that this is debarred? That is the effect of subsection (2). I ask the Minister to examine this issue.
I can see the point being made by Deputy Hayes. While I recall receiving submissions on this issue by the PIBA and have some concerns regarding it, I would be inclined to go with the existing section. In a previous role as spokesperson on enterprise, trade and employment the relevant committee, of which Deputy Callely was Chairman, I examined the issue of insurance. One of the issues which arose three or four years ago was that of churning where it seemed that people were given much information about additional, renewed or changed life cover which may have been unnecessary. This was also an issue for the enterprise committee in the previous Dáil. There were concerns that older people, in particular, who were near retirement and who may have been vulnerable would be urged by the media to increase their cover and payments. I would be concerned that the standard PRSA should stand alone and be clearly marketed on its own. The enterprise committee compiled a report on the churning phenomenon on which it received some disturbing information.
This section provides for the protection of the consumer by ensuring that, in the case of the sale of a standard PRSA, the contract cannot in any way be dependent on, for example, the sale of life insurance. The contract for a standard PRSA is stand alone, as is its marketing documentation. That is not to say, however, that a person cannot take out a standard PRSA and a life assurance policy in one transaction. This is allowed, but no aspect of the contract or policy can be connected in any way. This is to ensure transparency of charges.
I agree with Deputy Broughan. While certain interests might make representations, one has to see from where they are coming. We are trying to ensure PRSAs are stand alone and not used as a marketing tool for other products. I urge the Deputy not to press the amendment.
There is an issue regarding protection whether as a retirement income or insurance. If we are excluding the marketing of other products regarding PRSAs, as in this paragraph, it could lead to difficulties. People are not adequately covered at the level of occupational pension cover, bonding or insurance. We should not debar this process, as is provided for in the Bill. The arguments made by some industry sources are worth considering. We do not need to over-regulate to the detriment of insurance cover. I hear what the Minister is saying and withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment No. 22 not moved.
I move amendment No. 23:
In page 29, line 11, to delete "15" and substitute "28".
This amendment deals with the preliminary disclosure certificate and the conditions imposed on a PRSA provider. Given the operation of normal business and the fundamental nature of a PRSA contract, perhaps a longer period of time would be reasonable. A period of 15 days is reasonably standard in other consumer legislation, but this is such a fundamental commitment that it is not unreasonable to ask for a 28 day period before the contract becomes binding.
Fifteen days is the standard cooling off period for insurance products. It would be preferable to retain it.
Amendment, by leave, withdrawn.
I move amendment No. 24:
In page 29, line 35, to delete "annually" and substitute "at six-monthly intervals".
This amendment deals with the statement of reasonable projection and is linked to other amendments which are important regarding the performance of PRSA investment products. I proceed on the basis of the experience of constituents and those who talk to me about different kinds of investment products. This is particularly the case where people have been disappointed. In the past I referred issues to the Insurance Ombudsman or the Consumers' Association where there was a perception that an annual projection regarding investments and equities may have been too infrequent. A week is a long time regarding stock market products and vehicles. There should be a requirement to produce a printed statement of reasonable projection more often than annually. Perhaps every six months is a reasonable period to allow people to review the performance of their PRSAs.
In this case it involves the statement of reasonable projection. However, investments, particularly equity investments, can change value at incredible speed. Through the financial media we have seen how people can be upset and matters are let slip, such as the IT downturn in the United States which had a devastating effect on some private investments and linked products. It may be fair to ask that a statement be issued more frequently than on an annual basis.
We are trying to be reasonable to everyone. The annual provision is strict. However, there is provision under subsection (1)(b) whereby, subject to subsection (3), the provider has to give a statement of reasonable projection at any time on being requested by a contributor to do so, subject to being given reasonable notice. In effect, there is a strict onus on the provider. It is reasonably standard to provide for an annual statement. The amendment would place a greater financial burden on the providers who might look for increased charges. I would err on the side of caution when changing this.
That may be the case because they had to report fairly regularly. Obviously people would phone up the company and ask what the policy is currently worth. One of the reasons these types of amendments are important is that, for example, endowment policies which were linked to mortgages seemed to be a total disaster. Public representatives had many complaints about that whole area whereby commitments were made that a 25 year mortgage would be paid off after ten or 15 years. This is how the policy was sold and people were really upset that it would barely make it after 25 years when they believed they had unnecessarily paid an additional amount of money in order to provide the life cover or whatever. Performance and monitoring of performance is absolutely crucial. I know people will phone in and ask for these things, therefore, receiving a report on a fairly regular basis would keep people on their guard. The annual reports people receive in relation to taxation and so on may not simply be good enough. Perhaps we should come back to this issue.
Perhaps we will look at it between now and Report Stage. I am not unsympathetic to the point raised by the Deputy but I must check it out.
Amendment, by leave, withdrawn.
I move amendment No. 25:
In page 30, to delete lines 36 to 47.
Why is there disclosure before transfer from a scheme to PRSA. It is an interesting area which was discussed and on which we received submissions in regard to how it might operate. It will be interesting to see how trustees act following September or October when PRSAs are up and running. I wonder why we need to include restrictions in section 3 in regard to a transfer where someone might have a small amount of service and less than €4,000 paid into the scheme. Section 113 can stand up just as well without that subsection.
This subsection allows for some flexibility in the area of transfers for occupational pension arrangements to PRSAs to cover small levels of pension benefits of less than €4,000 or where there is less than two years' service and no preserved benefit. To apply the fairly heavy disclosure regime to these smaller pension benefits is considered unnecessary and would reduce further the value of the benefit to people. It is to try to protect people so that the disclosure requirements do not eat into the small benefits people receive.
Amendment, by leave, withdrawn.
I move amendment No. 26:
In page 31, line 33, to delete "annually" and substitute "at six-monthly intervals".
This refers to general disclosure obligations on the PRSA provider. I note the statement of account which has a six month duration.
I will consider that aspect between now and Report Stage.
Amendment, by leave, withdrawn.
Amendments Nos. 27 and 28 not moved.
I move amendment No. 29:
In page 32, between lines 36 and 37, to insert the following:
"(4) A Statement of Reasonable Projection shall advise a potential or actual contributor to a PRSA of developments in relation to the state pensions and of the general performance of existing occupational schemes over the past decade.".
This occurred to me in regard to performance. Subsection (3) states that "a Statement of Reasonable Projection shall advise a potential or actual contributor to a PRSA of the importance of making adequate financial provision for retirement and of obtaining appropriate financial advice in that regard."
The Minister has the power to make regulations in regard to information. He can prescribe the form and contents of the Statement of Reasonable Projection and the various types of information included. What I wish to add is a bit similar to the general drift of an earlier amendment in the names of Deputy Hayes and myself that the potential or actual contributor would be aware of developments in relation to what might be happening to State pensions. The Taoiseach told the Fianna Fáil Árd Fheis——
(Interruptions.)
——that he would raise this issue again and again.
Obviously we are talking about the three pension tiers and encouraging people to have occupational pensions. We referred to countries such as Sweden as well as Ireland. I read the literature on the pensions reserve fund on the Internet and elsewhere during the lead-in to the Second Stage of the Bill. This seemed to indicate we are among the good guys of Europe, together with Sweden, because we seem to be able to give an absolute guarantee to State pensions and we may be in a position at some stage to similarly guarantee occupational pensions. Therefore, I wonder why we cannot include here that people should be aware of the value of occupational pensions and the general performance of existing schemes. One of the problems with existing occupational schemes is that it is very difficult for ordinary citizens to get a comparison in order to see how areas are performing. It would be interesting to have this information in regard to, for example, Cadburys vis-à-vis the Guinness fund and major private sector employers such as Intel. Perhaps there could be some information in this whole area whereby one could say one company is not doing as well as another. It might be important to include a little bit of extra information on existing occupational pension schemes and also on what is likely to happen on the State front. By simply setting aside that fund, and assuming the Minister’s fears will not be realised and it will not be raided by future Ministers, perhaps the 1% will remain. Our Fine Gael colleagues are talking about throwing an extra 0.5% into it.
Where growth is more than5%.
Yes. These should be very interesting negotiations.
There will be an interesting policy discussion by all parties on this.
However, that is the general point which I am reiterating.
I consider it desirable to include a reference to the social welfare and old age contributory pension in the Statement of Reasonable Projection. I will undertake to come back to the issue on Report Stage. This could be a statement giving the value of the social welfare pension as a percentage of average industrial earnings at the date of projection. I will look at it in relation to the issue of general performance. As I said previously, I cannot take hostages to fortune in that respect. I cannot give an undertaking that we will put an onus on the Pensions Board or the Statement of Reasonable Projection flowing from the actuarial involvement in that as to the general performance of the funds over the previous period.
Amendment, by leave, withdrawn.
Amendments Nos. 30 and 31 not moved.
I move amendment No. 32:
In page 34, line 42, to delete "section 94(6)" and substitute "section 94(1)(b)”.
This was brought to my attention and I am happy to accept this technical amendment.
It makes a change that clears matters up.
Amendment agreed to.
I move amendment No. 33:
In page 37, between lines 6 and 7, to insert the following:
"(8) (a) Contributions shall be treated in the same manner for the purpose of relief from income tax, where the payment of the contribution is made by the contributor or is made on his behalf to the PRSA provider.
(b) Contributions shall be treated in the same manner for the purpose of relief from pay related social insurance and health levy, where the payment of the contribution is made by the contributor or is made on his behalf to the PRSA provider.
(c) Such relief from pay related social insurance and health levy as applies to PRSA contributions shall apply to contributions in respect of existing personal pensions.”.
This is an important issue. It relates to the issue of tax advantage on payroll deductions. Section 121(7) states that the employer has no duty of care to employees regarding the investment performance of standard PRSA schemes that he or she puts in place for employees. The schemes where deductions are from salary will currently have an advantage over schemes in which the employee has become involved privately because the net pay system will apply. Tax and PRSI will apply on salary, less contributions to the employer designated schemes so that the employee gets tax and PRSI levies relief through the works scheme but only tax relief when the scheme is taken up privately. Since the employer decides the scheme and has no duty to the employees regarding the performance, there is a view that there is a danger that larger schemes developing where no one is checking the investment performance could prove a risk to employees. PRSA schemes run privately by contractors should be able to attract equal benefit to counter this and to ensure that there is competition and choice for employee pension funds.
The objective of the amendment is to provide a level playing pitch in respect of tax deductibility. This concern is particularly relevant to larger, so-called monolithic schemes where very little investment assessing takes place. This is an important amendment and I ask the Minister to consider it.
The amendment is mainly concerned with the tax relief that applied to PRSA contributions and would more properly belong in section 4 of the Bill. It seeks to have contributions made on behalf of an employee treated in the same manner as contributions made by an employee both for tax purposes and for PRSI and health contribution purposes. Under the tax provisions as contained in section 4, PRSA contributions by an employer are treated as a benefit in kind in the hands of the employee. Such contributions are treated for tax relief purposes as having been made by the employee so that effectively a benefit in kind charge will only arise where the aggregate contributions made in a year exceed the relevant limits. Relief for PRSI and health levies will also be given in respect of such contributions.
Measures to this effect were contained in this year's Social Welfare Bill, which is being amended to allow relief for PRSI and health levies in respect of RAC and PRSA contributions where the contributor is an employee or director.
Accordingly I reject the amendment on the basis that the matter contained in the amendments is already in this Bill as drafted and also in the Social Welfare Bill.
The Minister is saying there is no difference, therefore, on the tax advantage for both schemes. Is that the case?
Does the Deputy mean tax advantage as between employer and employee?
Yes.
My understanding is that there is not in effect any advantage.
I withdraw my amendment and will come back to it on Report Stage.
Amendment, by leave, withdrawn.
I move amendment No. 34:
In page 38, to delete lines 1 to 18.
I have a question with regard to page 36, section 121(4), the obligation on the employer to provide access and to pay and remit contributions. The employer has to commit funds within 21 days. For a large employer making these deductions, are there safeguards to ensure that large employers do not use these funds even for the three week period? A very large employer with 200 to 300 staff, over three weeks, could manage to use the funds for some purpose. Over 12 months or ten years, presumably if the total interest was added up, that would be an advantage to the employer. Are there any safeguards that the Minister thinks are in place to ensure that this does not happen?
I am particularly talking about large employers who would take the money at payroll source. They would have three weeks in total to commit the money to the administrator of the fund. There is nothing in my reading of it that would prevent them using this fund for other purposes for that three week period.
Originally a 15 day period was proposed in the Bill when it was published and we received fairly strong representations mostly from employers saying that it was a very tight timeframe. That is why the 21-day period was agreed in the Seanad. Employers would have the benefit of this money but equally they would have the benefit of money they would get from employees in relation to PRSI and PAYE. There are obligations on them to transmit the money as quickly as possible subject to the legislation in that respect in relation to income tax. We felt that 21 days was a reasonable time. There is nothing we can put in to say that they should pay interest on the money because in effect they are unpaid collectors both for the tax man and for the purposes of this legislation. Here, we are setting up another layer of bureaucracy and employers often give out about the fact that they are in effect tax collectors and deductors for employees.
Is there anything in the Bill which outlaws the practice of using this money for the three weeks?
No.
Is the Minister happy that it will not be abused?
The fact that there is an onus on them in the Bill to transmit the money within 21 days is enough. There is not really any other way because this in effect would be a rolling situation whereby they would be paying out money on a fairly constant basis. I am not saying we are not charging interest on this money because there is a quid pro quo in that they are in effect providing a service to people to deduct money and pass it on. However, we must accept that it does employ people. The amount of paperwork and bureaucracy that employers must go through is significant and this is yet another layer for which they are not getting paid. Provided they pass on the money within the relatively short space of time, which is a new obligation that was not there before in relation to other pension situations, it is a fairly strict onus on people.
When I read it I thought I would raise it as an issue.
On amendment No. 34?
Amendment No. 34 proposes to amend lines 1 to 18 on page 38. It proposes to take out of the legislation the replacement of buy-out bonds and there is a view that eliminating buy-out bonds does not in itself serve any useful purpose and that if they are not available, schemes for members of 15 years service and over will have no vehicle in the event of a wind-up. I am aware that there has been the suggestion that this section will not be invoked until or unless section 772(3)(d) of the Tax Act is eliminated. However, this would require further legislation which seems unlikely. This has been brought to my attention. The Minister is aware there was some publicity concerning this when the Bill was on Second Sage. Eliminating this buy-out provides fewer options for people. There has been a good deal of concern about the 15 year stipulation proposed in the Bill.
We are bringing forward amendments regarding this later in the Bill. This section will only come into effect when it specifically commences. Therefore, there is no need to delete it. It could be useful to have it in place in the future. Perhaps we can deal with the issue of the replacement of buy-out bonds when we deal with amendments Nos. 83 and 86.
Is the Minister telling me that he is taking the amendment on board?
No, I am saying that the section should be left in and that we can discuss the issue of buy-out bonds later.
Amendment, by leave, withdrawn.
I move amendment No. 35:
In page 38, lines 42 and 43, to delete "or a defined contribution scheme".
This relates to transfers of PRSA assets to the defined benefit and contribution schemes. I am using the reference to the two types of scheme to highlight that employees are increasingly worried and upset at the drift to defined contribution schemes rather than defined benefit schemes where, like those in the public service, the risk is borne by the employer regarding the 50% or 66% pension that will accrue at the end of a time period. In defined contribution schemes the risk, effectively, is transferred to the employee. A defined contribution scheme can do well or badly depending on the performance of the investment underlying the fund. This has become a significant issue in the United Kingdom and the United States. I know from communication with the ICTU that it is one that will be raised in the next round of national pay discussions.
This is an area that we need to address. I am not sure if this is the way to do it, but the amendment gives me the opportunity to raise this issue of concern. Internationally, it is linked to the new accountancy rules whereby pension liabilities have to be disclosed on the balance sheet. In some German companies it emerged that future pension liabilities, at 65% or 70% of salaries, were enormous, perhaps even reaching the level of the other assets of the company. This is a profound issue and seems to be a bad development in countries such as Ireland that have made some attempt to promote occupational pensions. I am seeking to encourage the debate by removing the reference to a defined contribution scheme.
I understand what the Deputy is saying. The sentiments he expresses are related to a much broader issue not dealt with in the section. While people may have concerns, the Deputy's amendment would not assist them in any way. As it might be restrictive in the delivery of PRSAs, I, therefore, oppose it.
Amendment, by leave, withdrawn.
I move amendment No. 36:
In page 39, line 9, to delete "2" and substitute "6".
This relates to the retirement annuity contract and defined contribution schemes where a scheme has been terminated and the assets transferred to one or more PRSAs. It refers to the notice of at least two months that members would get. A longer time period should be imposed to allow employees and members examine what is happening and know what future plans might be. I propose to extend it to six months.
We consider that the shorter timeframe of two months is better as the information could be dated and changed in some way over the longer period.
Amendment, by leave, withdrawn.
As amendment No. 38 is an alternative to amendment No. 37, we can discuss them together.
I move amendment No. 37:
In page 39, between lines 11 and 12, to insert the following:
"126.-The Minister shall cause-
(a) a report in relation to the extent of the application of occupational and other pensions (other than pensions under the Social Welfare Acts), in respect of such matters as the Minister considers to be relevant, to the population to be prepared by such persons as the Minister may determine not later than 3 years after the commencement of section 3 of the Pensions (Amendment) Act, 2002, in its entirety and a copy of that report to be furnished to the Minister, and
(b) a copy of that report to be laid before each House of the Oireachtas within 6 months after its preparation.’.”.
This amendment builds a review period into the Bill to ensure the policy objective in relation to the second pillar pension coverage of the working population is being achieved over time. The Pensions Board target for second pillar pension coverage is 70% of the workforce aged over 30 years. The Government is firmly committed to facilitating the objective of increasing supplementary pension coverage among employees. Achieving the objective will, of necessity, take commitment and effort on the part of all employers, trade unions and, not least, the pension industry. All are agreed that if the proposed PRSA arrangements on a voluntary basis do not succeed, the position regarding mandatory provision will have to be reviewed. I have already said that such a review would be undertaken sooner rather than later and the amendment reflects my concerns. It makes a commitment to undertake a review within three years of the enactment of the legislation.
I welcome the amendment. The Minister has responded to comments made on Second Stage. It is important it is included in the Bill. If we do not reach the kind of coverage for which we are looking within a reasonable period of time, we should broach the compulsion issue again. Amendment No. 38 would probably be more prescriptive in terms of percentages to be reached by a certain period of time.
As the Minister said on Second Stage, it now looks as if the percentage in respect of coverage throughout the workforce will be less than 50%. The issue of coverage will have to be addressed sooner rather than later. The issue of compulsion will have to be addressed unless we reach the percentage increases that we all expect and wish.
Amendment agreed to.
Amendment No. 38 not moved.
Section 3, as amended, agreed to.
SECTION 4.
I move amendment No. 39:
In page 40, between lines 45 and 46, to insert the following:
"(ii) by the substitution in section 772(3A) and (3B) of 'proprietary director' for 'employee';".
This amendment relates to approved retirement funds. I am led to believe that ordinary employees cannot avail of the option to select an approved retirement fund instead of a fixed pension at retirement. Approved retirement funds allow an individual to manage his or her own funds in retirement and draw benefits in a flexible manner. Currently directors and those contributing to personal pension plans can avail of these options first introduced in the 1999 budget. PRSA holders will also be able to avail of approved retirement fund options, excluding employees in occupational pension schemes.
Amendments made to the Bill restrict transfers from occupational pension schemes to PRSAs if an employee has more than 15 years service. This was designed to stop the wholesale conversion of long established schemes into PRSAs. An adverse consequence is that long service employees will not be able to access approved retirement funds options by converting their schemes into PRSAs shortly before retirement. As some schemes transfer to aggregate years service between pension schemes, a person may have to think twice before moving a fund to a new scheme on changing jobs. It would be more likely if the 15 year rule applied to the total pension fund. A way around it would be to allow all employees avail of retirement fund based options. That is the intent of the amendment in order to create a level playing pitch for all in respect of drawing down approved retirement funds.
I support the amendment. I am attempting to do something similar in amendment No. 48 which states that "any employee may opt to contribute to an approved retirement fund in preference to a PRSA and may enjoy the same tax relief as self-employed contributors. . . " In the 1999 budget the Minister for Finance, Deputy McCreevy, developed ARFs and gave self-employed proprietors the freedom to manage their own retirement funds. Formerly they received tax relief on savings and then purchased an annuity, but by increasing the tax free limits or tax benefits of approved retirement funds the Minister for Finance gave the self-employed a freedom which employees do not enjoy.
The point is well taken that employees should have similar freedom, especially at the end of the life of the PRSA product. Every citizen should have the right to manage freely his or her pension fund. Since coming into the House I have found Finance Bills frustrating because they are mainly concerned with tax concessions for businesses and the self-employed while employees are dealt with in a few summary pages and receive little encouragement compared to those making a business investment. This must be balanced out. A start could be made by giving employees more freedom in this area. Therefore, I support the amendment.
It has been the hallmark of the Minister for Finance in the changes that he has made in tax rebates and pensions to give employees, whether self-employed or otherwise, more freedom to look after their own money. The amendment is concerned with allowing all members of an occupational pension scheme to exercise an ARF option, which would not generally be suitable for those on low incomes or with low pension cover. At present, this option is confined to proprietary directors and employees generally regarding contributions made by way of AVCs. The amendment is not related to PRSAs and would more properly be dealt with under the Finance Bill, which amends the Taxes Consolidation Act only in regard to PRSAs and related tax provisions. I must, therefore, reject it.
It is not entirely true to say that the Bill just deals with PRSAs as there are other miscellaneous provisions on pensions such as the appointment of a pensions ombudsman. This is an opportunity to raise the issue because there is discrimination between directors, those who have the option to purchase PSRAs, and employees who do not. The Minister stated it would not be advisable for those on modest or low incomes to do this, but that would be a matter for them. Are we saying employees cannot manage their own money?
I said it is more relevant to those on higher incomes because of the limits.
It is more relevant that they receive tax relief.
It is a fact. It is related to income.
The objective of PSRAs is flexibility. Why can there not be the same flexibility in this instance?
It goes back to the 15 year issue. We do not want a wholesale transfer from existing good schemes to PRSAs as we want to protect what is good and people's positions.
Who determines what is good?
We are trying to balance the various conflicting interests. If a person is in a good scheme, we do not want him or her transferring everything to another product that might be of less value than the original one.
Does the Minister think that it is just an income related issue? Is he saying that, as directors and the self-employed have larger incomes, they can take the risk? If someone has paid into a scheme, it is his or her money and he or she has the right to decide what to do with it. At present, employees are subject to two different tax regimes. It is not up to Government or politicians to tell people what is in their interests, which is, in effect, what the provisions of the 1999 budget do.
I am restricted in relation to tax provisions which are only relevant to PRSAs.
I saw a photograph of the Minister for Finance in a bowler hat, or whatever it was, at the races at Cheltenham last week and admire him because he is an implacable advocate of his class, that is, those with significant assets.
Does the Deputy believe that?
Yes. He is an advocate of the wealthier deciles. He was the Minister's predecessor and demonstrated then the same relentless attitude towards social welfare provision. As Minister for Finance, he maintains the same attitude. I am not making a personal observation but I am talking——
I disagree with the Deputy.
This is a fundamental issue which relates to whether the PAYE system is constitutional, and employees' freedom compared to the self-employed and business owners. I agree with Deputy Hayes that nobody should be constrained in this way. Budgets and the tax code discriminate against employees, as does the pensions system.
I do not accept that. In the last budget, for example, the Minister for Finance made substantial changes to employees' pension provisions, giving them——
He made substantial provision for owners of capital assets in different budgets.
He did, but in his period of office——
The 1999 changes were beneficial to directors and those with considerable sums of money to play with in terms of the amount of tax they had to pay. This is widely accepted. The same cannot be said of ordinary employees. The 15 year limit rule was not contained in the Bill as published but was introduced on Report Stage in the Seanad.
That 15 years was not related to the tax.
Presumably it would have come from the Department of Finance.
I do not think so.
In reviewing existing pension provisions, we are asked here to do our best to provide maximum flexibility for employees and create a level playing pitch for everyone. The Department of Finance has a substantial hand in this Bill. Many of the amendments tabled on Report Stage in the Seanad were understandably from the Department of Finance. As the person responsible for trying to encourage people to put greater amounts of money into savings in the context of PRSAs, the Minister for Social, Community and Family Affairs should try to create a level playing pitch in this area. Clearly the existing law does not do that and it discriminates heavily in favour of people on substantial incomes. I know the advice is coming from the Department of Finance——
It is not only the Department of Finance. The national pension policy initiative also pointed to the need to be very careful about the transfer of funds from good schemes into the PRSA system.
Therefore, that defeats the argument of the Finance Act, 1999, where the Government did precisely that in respect of company directors.
We are talking about PRSAs.
There is a distinction between that and the rights of employees. Company directors on PRSAs are on the same footing in respect of ARFs. However, people who have paid into occupational schemes for 15 years or more will not be able to avail of this tax concession.
I can push it no further because I am not in a position to give any different tax treatment other than the ones approved by the Department of Finance in relation to these. I cannot make changes except in relation to PRSAs.
This is more than just a PRSA Bill. This Bill attempts to clean up part of the legislative code for pensions. This is an area the Opposition has highlighted.
The taxation proposals we are bringing forward relate only to PRSAs.
Yes, but there are other provisions in the Bill relating to pension participation.
However, this amendment relates to tax treatment.
That is true, but the only opportunity we get is when it is being reviewed every five years.
That may be so, but it should be done in the Finance Bill and not in this one.
Amendment put and declared lost.
Amendment No. 41 is an alternative to amendment No. 40 and both amendments may be discussed together.
I move amendment No. 40:
In page 41, to delete lines 1 to 18 and substitute the following:
" '(3D) A retirement benefits scheme shall not cease to be an approved scheme because of any provision in the rules of the scheme whereby, either or both-
(a) a member’s entitlements under the scheme, other than an amount referred to in paragraph (b), may, either on the member’s changing employment or on the scheme being wound up, be transferred to one or more than one PRSA to which that member is the contributor if the following conditions are satisfied, that is to say-
(i) benefits have not become payable to the member under the scheme, and
(ii) the period or the aggregate of the periods for which the individual has been a member of the scheme or of any other scheme related to that individual's employment with, or with any person connected with, the employer immediately before the said transfer is 15 years or less,
(b) an amount equal to the accumulated value of a member’s contributions to the scheme, which consist of additional voluntary contributions made by the member, may be transferred to one or more than one PRSA to which that member is the contributor.’,”.
This amendment provides that the accrued rights under an AVC scheme may be transferred to a PRSA, subject to the rules of the AVC scheme being amended to cater for this. It is to provide some flexibility in that they will not be subject to the 15 year rule.
Unlike the poor employees.
Amendment agreed to.
Amendment No. 41 not moved.
I move amendment No. 42
In page 41, between lines 18 and 19, to insert the following:
"(iii) by the insertion in section 772 of the following after subsection (4)(b)(iv):
'(v) allows an employee who is retiring after attaining 50 years of age a maximum pension from all sources of two thirds of twice the national average salary with the appropriate commutation of this amount as a lump sum provided the employee has made not less than five years pay relates social insurance contributions.'.".
Sitting suspended at 12.46 p.m. and resumed at 2 p.m.
This amendment relates to the issue of maximum benefits and the proposal is to amend section 772 of the Taxes Consolidation Act, 1997. The current rules for occupational pension schemes relate maximum benefits to years of service with an employer and salary when leaving or retiring. The usual basis is one sixtieth of salary per year of service for pension purposes and a tax-free lump sum of three eightieths. The basic levels are enhanced for late starters from ten years to twenty years service for those who retire early - before 65 in most scenarios - and maximum benefits are restricted by the proportion of actual to potential years service. Calculating maximum benefits in circumstances where one changes employment or retires early can become very complex. My proposed amendment would streamline matters and make the system much simpler than it now is, so that an employee retiring after age 50 can avail of fixed maximum benefits from all sources relating to, say, twice the national average salary, regardless of years service and salary at retirement, provided he or she has a minimum working history or PRSI record of approximately five years. This would streamline maximum benefits for low to middle income earners and would favour late starters, who would otherwise be penalised by having very short service with their last employer, particularly if retiring before 65. This would provide an easier system and, in my estimation, would give a benefit to middle income earners.
The amendment seeks to allow the Revenue Commissioners to approve an occupational pension scheme which provides, subject to conditions, a pension equal to two thirds of twice the national average salary - that is one and one-third times salary - to a person over 50 who is retiring. At present, the maximum pension that may be provided in accordance with the revenue code for occupational pension schemes is linked to the employee's final salary and to the number of years service in that employment. Of course, an employee may have pension benefits from earlier employment and these may be taken into account. The revenue code has been devised over a long period and is largely based on achieving parity of treatment between private sector employees and public sector employees. The code allows an employee with ten or more years service to receive a maximum pension of two-thirds of final remuneration. There is a sliding scale between one and ten years service. In practice, very few employees would receive benefits equal to the maximum approved limits. Such pensions would tend to be confined to high earners in whose case the amendment would have no effect. Also, the amendment is not related to the introduction of PRSAs and is more properly a matter for the Finance Bill. The present Bill deals with the Taxes Consolidation Acts only as regards the tax provisions of PRSAs Accordingly, I must reject the amendment.
One of the issues which we discussed prior to lunch and which runs throughout this Bill is the tax treatment given to top income earners. If we are really serious about doing something significant on pensions, we should provide incentives through the taxation system to encourage people on small incomes to put money aside. There are loopholes in the current system. I referred earlier to the issue of transfer, as it relates to the 1998 budget and Finance Act. We need to look at how the taxation code is used to encourage people to save. The treatment of those on low incomes, by comparison with those at the top end of the income scale, is not the same. While this is not a matter directly for the Minister, it falls under the Finance Act and there is a necessity to bring about a fairer regime on taxation as it applies to pensions policy.
Amendment, by leave, withdrawn.
Amendment No. 43 is ruled out of order as it involves a potential charge on the Revenue.
Why is that? The maximum at the moment is €254,000 and the amendment aims to change that figure to €126,000. This will limit the amount of tax and reduce the potential of the State to hand out tax relief for these purposes. How would that incur costs? If anything, it would keep more money in the coffers by limiting the income threshold on which people can take out these PRSAs.
Tax relief under the Bill as it stands would be available at up to 30% of the higher amount. The amendment would cause it to be available only up to 30% of the proposed lower amount.
That means that the scope of people to take out these products is reduced.
In so far as it proposes that higher earners should not be able to avail of higher amounts of relief, the ceiling beneath which relief is available is effectively reduced and there is also a charge on the people.
May I talk on the section?
I will give the Deputy the note that I have on amendment No. 43. Can we talk on the amendment?
No, it is out of order. We can talk about the section but it would be best if we came back to it later.
Amendments Nos. 43 to 45, inclusive, not moved.
I move amendment No. 46:
In page 53, line 15, to delete "distribution" and substitute "payment or amount treated as a payment".
This is technical amendment which removes the incorrect reference to distribution.
Amendment agreed to.
Amendment No. 47 not moved.
I move amendment No. 48:
In page 55, between lines 39 and 40, to insert the following:
"(2) Any employee may opt to contribute to an approved retirement fund in preference to a PRSA fund and may enjoy the same tax relief as self-employed contributors to an approved retirement fund.".
We had a discussion this morning on this matter and it gave me the opportunity to raise the issue of the approved retirement fund option and section 787H on tax legislation. The Bill states that the assets of a PRSA may be made available to a beneficiary, that an individual may opt to have those assets transferred to an approved retirement fund and that the PRSA administrator shall make the transfer. I was trying to ensure that the full benefit of somebody being transferred to an ARF would accrue to an employee as it would to a self-employed person.
The amendment seeks to give an employee the option to contribute to an approved retirement fund as an alternative to contributing to a PRSA. An ARF is a fund into which the proceeds of a retirement annuity contract or the value of certain occupational pensions may be transferred on retirement. Pension contributions may be made to an ARF. Employees who are not in pensionable employment may currently take out an RAC and transfer the proceeds of the RAC to an ARF when benefits become payable. Benefits that derive from the AVC in occupational pension schemes by employees may also be transferred to an ARF on retirement.
Directors who own more than 5% of the company providing the retirement benefit may also transfer their pension entitlement to an ARF. All transfers to an ARF are subject to an individual having to transfer €63,5000 to an approved minimum retirement fund unless the individual has an income for life of at least €12,700. The PRSA tax provisions as drafted allow PRSA assets to be transferred to an ARF including the case of a PRSA to which an employee is a contributor. Alternatively, as a PRSA is a fund of assets and therefore resembles an ARF, there is an option to leave the money in the PRSA and subject to the ARF requirement to withdraw the assets from the PRSA. This option is provided to avoid unnecessary costs that might be involved in making a transfer from a PRSA to an ARF. In so far as the Deputy refers to employees being entitled to the same relief as the self-employed, the Finance Bill recently passed by the Dáil provides accordingly. Therefore, the amendment is not necessary and I must oppose it.
Amendment, by leave, withdrawn.
I move amendment No. 49:
In page 57, line 56, after "State" to insert "or in other jurisdictions".
The amendment is in relation to Revenue approval of the PRSA products and I want to clarify whether the arrangements in respect of that product may be entered into by an individual with a person lawfully carrying on the business of PRSA provider in other jurisdictions. Am I correct that a PRSA provider can, in effect, come from another jurisdiction?
It would have to be established in this State for Revenue purposes.
However, a French company could enter the Irish market, get the approval of the product by the Revenue Commissioners and there would be no need for the amendment. The point I make in relation to the amendment is whether it is necessary to add the phrase "or in other jurisdictions".
I can give the Deputy my notes if he needs them. The amendment seeks to allow the Revenue Commissioners to approve a PRSA product entered into by an individual with a person carrying on a business as a PRSA provider, either in the State - as in the Bill passed by Seanad Éireann - or in any other jurisdiction. Since the PRSAs will be sold in the State to Irish residents, by and large, it is considered that the PRSA provider must be carrying on the business of PRSA provider lawfully in the State. The provider regulated abroad may well carry on the business of PRSA provider abroad. However, by definition he or she must carry on such a business here and must do so lawfully.
Persons who may be PRSA providers are defined in section 91 of the Pensions Act, 1990, as follows: (a) an investment firm authorised under Council directives; (b) an insurance undertaking authorised to transact business under Council directives; and (c) a credit institution under Article 1 of Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000.
Would the opposite apply? Could an Irish PRSA provider go to another market or could there be a situation where we had a stakeholder?
It would not be tax-effective.
Amendment, by leave, withdrawn.
I move amendment No. 50:
In page 59, to delete lines 18 to 22 and substitute the following:
"by way of transfer of the PRSA assets to the estate of the PRSA contributor,".
This amendment is to remove the reference to premiums which is more apt to describe contributions to a policy issued by an insurance company.
Amendment agreed to.
I move amendment No. 51:
In page 60, line 12, after "50" to insert "or over".
This amendment ensures that the early retirement option will be available to those at 50 or over rather than being confined to those at age 50.
Amendment agreed to.
I move amendment No. 52:
In page 62, to delete lines 30 to 33 and substitute the following:
"(e) in part 42, by the substitution, in subparagraph (ii) of paragraph (g) (inserted by the Finance Act, 2001), of section 986(1) of ’Chapter 1 or Chapter 2 or Chapter 2A of Part 30’, and”.
This is similar to the point I made about providing the same relief for personal pensions as company pensions, or PRSAs. As employees who contribute to their personal pension funds by salary deductions cannot avail of net pay arrangements, they may have to transfer from personal pensions to PRSAs to achieve this. This simple amendment would give greater personal protection to the chapter and the relevant paragraph and allow employees to enjoy income tax and PRSI relief at source for retirement annuity contributions, as is the case with PRSA contributions. I repeat the question asked: why should we discriminate between employees?
The amendment seeks to apply the net pay arrangement, which applies to an employee's contributions to an occupational pension scheme, to RAC contributions. An employee's pay for the purposes of applying PAYE and PRSI is the net amount after pension contributions. A similar treatment has been provided for for PRSA contributions deducted by an employer on behalf of an employee. There is an obligation on the employer to make such deductions which the amendment seeks to extend to RAC contributions deducted by an employer. RACs are largely aimed at self-employed persons. Those not in pensionable employment may also get tax relief for RAC contributions, but, in general, employers are not concerned with or interested in deducting such contributions from an employee's salary or wages and the application of the net pay arrangements does not arise.
The Taxes Consolidation Act is being amended only in relation to its tax provisions for PRSAs, to which the issue under discussion is not directly relevant. Questions of a general nature regarding tax relief for pension contributions would be more properly a matter for the Finance Bill. I am quite sure that the net pay arrangements apply, but I will check before Report Stage.
Amendment, by leave, withdrawn.
Question proposed: "That section 4, as amended, stand part of the Bill."
Returning to the maximum income limit, the Minister has provided for a figure of €254,000, which is considerably more than the stakeholder pension in the United Kingdom. Will those with pension cover take out a PRSA for their children or other relatives when the PRSA scheme is up and running, as a tax efficient method of putting money aside? I question the total capping income, as I do not know how the Minister arrived at the figure of €254,000 as an income threshold. The problem is that we are trying to introduce a tax measure focused on those who are not saving at present, but it is not sending out the right signal to have an upper income limit and allow virtually anyone to apply, even if they have existing cover. I question how directly this will apply to those who are not saving at present. I understand one needs a specific taxation system for the introduction of a product, but question the fact that it does not discriminate on the basis of income.
The Deputy seeks to reduce the earnings cap to €126,000. The limit of €254,000 proposed in the Bill is the same as that which applies to RACs. While no earnings cap applies in the case of occupational pension schemes, a funding restriction confines the maximum pension which can be provided to two thirds of the final salary. The NIPI report recommended that the tax regime for PRSAs should not favour new products at the expense of existing ones or vice versa. Accordingly, the RAC earnings cap has been retained while additional voluntary PRSA contributions linked to an occupational pensions scheme are controlled by the scheme's funding limit. While the earnings cap of €254,000, which has been in place since 1999, is relatively large, it should be viewed in light of the fact that many people not in occupational pension schemes begin to save for pensions relatively late in life. The effect of the earnings cap is that persons between the ages of 40 and 60 years are allowed to contribute up to €76,200 per annum towards a PRSA. It favours those who start saving later in life.
If one takes the general point raised in submissions on the Bill, that all pensions provision is a charge on the economy at a particular time, could it be inferred that high earners are once more benefiting from a bias as a result of tax expenditure foregone vis-à-vis the first tier of contributory pensions? If we make it attractive for high earners to put away the maximum amount of income and thereby receive the maximum amount of tax relief, can a case not be made in global terms that we are again discriminating against those on low incomes? Despite what I said this morning about the Taoiseach, that he would increase contributory and non-contributory pensions time and again, the scope for this is more limited when one has foregone an increased amount of tax revenue.
I do not think so. We want to encourage as many people as possible to benefit from PRSAs. If a cohort of late savers see PRSAs as an opportunity, they should be encouraged, irrespective of their income. I thought the other side of the House may have tried to increase the cap rather than reduce it. It is purposely generous, in order to try to get as many people as possible to invest in PRSAs.
There is a reference on page 50 of the Bill to "one or more PRSA products". Therefore, one can buy more than one product.
The overall cap applies to one person.
Yes, but one can buy more than one product.
Yes.
One can have three or four products as long as one does not exceed the cap.
I am told that the maximum relief is €76,000.
It does not matter if one has ten products or just one. I apologise for moving around this section so extensively, but may I draw the Minister's attention to section 787G?
This is amendment No. 45, in effect.
No. I have a question about a reference in subsection (2), on page 53, to "the PRSA administrator from the individual beneficially entitled to the assets in the PRSA or from the estate of the deceased individual, as the case may be." The Minister has not put a time limit on the transfer of the estate of a deceased PRSA contributor, which naturally goes to the spouse or next of kin. Is such a time limit necessary to ensure the spouse gets the money as soon as possible?
I presume it is an inheritance law matter.
I come across cases in my constituency where a person dies and the matter of trying to access the funds into which they have been paying can drag on for a considerable period. Regarding PRSA, did the Minister consider putting a time limit on transferring that money where someone dies? Is there such a provision in the Bill?
No, there is not. There would be no benefit in doing anything from a legislative point of view because to do so would be to restrict the transfer.
I am talking about imposing a limit on the amount of time it can take for a transfer to occur.
That is not a matter to provide for in this Bill.
Paragraph 787K(1)(c)(ii) provides for an annuity or other sums payable to commence, or for assets to be made available, between the ages of 60 or 75. Why is the age limit of 75 there?
A limit is set out because, to a certain extent, after that age what is being done is not pension planning. It is more estate planning and the provision might be misused.
Is the cut off age of 75 included in other legislation?
In page 62, from line 36, subsections (a), (b), (c) and (d) refer to the declaration of a PRSA administrator. One of the conditions is that the declaration must be signed by the declarer. Am I right in saying that there is no definition of “declarer” in the definitions section? Who is the declarer?
In the paragraph referred to by the Deputy, the declarer is the PRSA administrator.
Question put and agreed to.
SECTION 5.
I move amendment No. 53:
In page 63, lines 34 to 36, to delete all words from and including "the" in line 34, down to and including "commences" in line 36 and substitute the following:
"no longer than 6 months after the enactment of this Act".
This amendment relates to "establishment day", meaning the day on which section 5 of the Pensions (Amendment) Act, 2002, commences. I want to provide that commencement will take place no longer than six months after the enactment of this Bill. Is it clear what "establishment day" means?
We intend to set up the office of the ombudsman as quickly as possible and this proposal is not necessary.
Amendment, by leave, withdrawn.
Amendments Nos. 54 and 55 are related and may be discussed together, by agreement.
I move amendment No. 54:
In page 63, between lines 36 and 37, to insert the following:
" 'Oireachtas Committee' means the Joint Oireachtas Committee on Family, Community and Social Affairs;".
Through this amendment I seek to involve our committee in the deliberations leading to the appointment of an ombudsman. Increasingly, parliamentary committees will scrutinise the appointment procedures for positions on State boards and many other positions of importance in the State. The absolute power to appoint an ombudsman is the Minister's and I do not object to that. What I suggest in these amendments is that our committee should be involved as it is this committee, or its appropriate successor, that will be charged with monitoring the effectiveness of this legislation as we go forward. It would be good practice for the relevant Oireachtas committee to, at least, hear the people putting themselves forward for this office. We may well issue an opinion, but ultimately the decision will be a matter for the Minister. I am not suggesting it should not be, I suggest that we should have a role in vetting those putting themselves forward as candidates for this office.
Such practices will be introduced in the case of State boards and they should be introduced regarding office holders like this. It would be a useful way of involving this committee in the important work of the pensions board and, in particular, that of the pensions ombudsman.
This is a very worthwhile idea, which I support. When important officers come to the notice of the membership of the Dáil, it seems sudden. I am not sure what were the recent criteria in choosing the new governor of the Central Bank, but the office was in the news in recent weeks in relation to the AIB crisis. I have no doubt that the new governor is very well qualified and will be a fine representative in that job, but for that type of position there should be an input by a committee, in that case the input of the Oireachtas Committee on Finance and the Public Service and of the Committee of Public Accounts. Given our remit as the social affairs committee, it would be useful for us to have the opportunity to have an input into choosing a candidate to fill the office of pensions ombudsman.
Part 3, along with the PRSA provisions, forms the main part of the Bill and it is a wonderful innovation. The call for the creation of a pensions ombudsman has been the ongoing refrain of groups of former employees and pensioners since our colleagues across the water went down this road. It will be a very important public office and it is right that the Oireachtas, through this committee or its successor, is involved in the appointment.
The Bill provides for the appointment of the pensions ombudsman by the Minister, which I consider reasonable, given the nature of his work. It is important that a suitably qualified person is appointed, following the practice in the appointment of previous ombudsmen. I have no problem with the ombudsman, when appointed, coming to the committee and there is nothing in the Bill to prevent him from being called, but the appointment itself is a ministerial matter and one for the Government of the day.
That has certainly been the practice to date and I am not so sure that it has worked well in all cases, though in quite a number it has. We need to move to a scenario where Parliament has a role in the appointment of an ombudsman, given that the ombudsman will mediate on much of the legislation we put through the Oireachtas. The limited amendment I seek to make to allow us some say in the appointment of an ombudsman fully recognises the ultimate power of the Minister. I would not take that away for the moment. Politicians should appoint these people and we are politicians too. Involving the newly established office with this committee would be a very useful exercise. We will be charged, presumably, with the function of assessing the annual reports the ombudsman produces when the Minister lays them before the House. I am not singling out the poor pensions ombudsman, this is the way to go in the case of all future appointments.
Have the beginnings of this system not already been introduced in relation to judicial appointments? As I understand it, limited reforms have been made in this area and some people feel much more fundamental reforms are required. Has a process been initiated which gives the legal profession an input into these decisions? Obviously, the measures do not go as far as in the United States where Congress has the supreme role in this regard. There, the executive makes a decision which usually goes before Congress for confirmation. This allows one to examine factors such as the candidate's career. It is right that Parliament should be involved in the appointment to what will be one of our most important offices. Given our experience as Deputies, many queries and issues will be raised with this office from it first day onwards.
We are not dealing with American circumstances. I question whether the Deputy's example of the legal profession's influence on the selection of judges is a good one. I do not propose to comment further on the matter except to point out that the view is that it is already difficult enough to be included in the list proposed to the Government and that, to a certain extent, people who are not in the know and the ordinary five eighths do not make it.
Do they have to belong to certain political parties?
I had better be careful or I could have them down on top of me.
At least the procedure would be totally public if it was done this way.
Although it is not a bad idea, I cannot accept the amendment.
Amendment put and declared lost.
I move amendment No. 55:
In page 64, between lines 37 and 38, to insert the following:
"(2) Before the Pensions Ombudsman is appointed by the Minister, the appropriate Oireachtas Committee shall consider the suitability of persons who are making themselves available for the position of Pensions Ombudsman. The Committee may make a recommendation to the Minister before an appointment is made.".
Amendment put and declared lost.
Amendment No. 57 is an alternative to No. 56 and No. 59 is related. The amendments may be discussed together by agreement.
I move amendment No. 56:
In page 64, to delete lines 38 to 44.
The amendment would remove the age limit imposed on the person to be appointed by section 128, paragraph 2 of which states: "A person shall be not more than 61 years of age upon first being appointed to the office of Pensions Ombudsman." I do not understand the reason this provision has been included. I am aware of a very celebrated case taken by a distinguished former Member of this House and current member of my party against a former Government on the basis that the age bar in the legislation in respect of, I believe, the office of the refugee commissioner was unlawful. Given that he won the case, we should not impose an age limit on the person to be appointed.
I support the amendments for the reasons enunciated by my colleague. It appears the European Union anti-ageism directive, which will become law in 2006, will make it illegal to impose compulsory retirement ages or compulsory ages of any kind on recruitment practices. A number of these kinds of cases have crossed my desk during my time on this committee. An interesting one related to a provision in the harbours legislation enacted in 1996 which stipulated that people of 60 years and over could not be appointed pilots in Dublin Port while existing pilots could continue to serve until they were 65 years.
This type of issue arises fairly regularly. Many people argue that if one is medically fit and has done the job very well, this practice must be discriminatory. In the case of the Harbours Act, I referred the matter to Mr. Niall Crowley of the Equality Authority. There is a grey area with regard to employment equality and equality legislation. In the long-term, I do not envisage that this practice will survive and it appears that under European Union legislation, it will not. One could also argue that a senior person - I will avoid the term senior citizen - would probably be the most dynamic and interesting in terms of pension provision. This also relates to my point with regard to the board, namely, that pensioners would feel that they best know the conditions under which they live and the way in which occupational schemes performed in the past. While I am not arguing that the ombudsman must be a pensioner, one can see the logic in appointing someone with extensive experience of life. This provision stands such logic on its head and for this reason I strongly favour deleting these provisions.
I will examine the matter as the figure of 61 years may be a little low given that I am also getting closer to it.
Some of the Minister's colleagues would be debarred in these circumstances.
It would be ludicrous to have it open ended. To return to the legal profession - coming from that profession you may think I am being very hard on it today - in the past some judges sat on the bench well into their eighties, which I do not believe is a good thing. There should be an upper limit and while the figure of 61 years is perhaps a little low, it was chosen because it applies to the public service ombudsman.
All kinds of issues will arise from equality legislation with regard to this area. It was put to us, for example, that——
As we have discovered in recent times, equality legislation, while very welcome, can be taken to its absolute extremes. If we remove an upper age limit, why set a threshold at the lower end of 18 years? Why should five year olds not be allowed to apply?
I think it was Sir Matt Busby, a famous manager, whose prescription for his very successful Manchester United team - I speak as a supporter - was that if one is good enough, one is old, or young, enough.
Without mentioning the name of my party colleague involved in the case to which I referred earlier, was it not the basis of his action that the Government imposed an age limit in the legislation and was he not successful?
I cannot recall, but I think he probably did win.
He did.
It did not get him the job.
I expect it got him something else, the money without the job. The point is that imposing an age limit is precisely the problem encountered in that legislation.
We will address the matter.
Amendment, by leave, withdrawn.
Amendment No. 57 not moved.
I move amendment No. 58:
In page 65, to delete lines 5 to 20.
While reading this section, it struck me that the powers to get rid of the pensions ombudsman rest solely with the Minister. It is over zealous that, at the stroke of a pen, he can decide to remove an ombudsman without recourse to the committee or other Ministers. I tabled the amendment because I am interested in fleshing out what the Minister has in mind in this respect. What would happen, for instance, if a Minister who disagreed with the findings of a pensions ombudsmen also had the power to remove him? The provision is extreme and should be recast for all future appointments, not just that of the pensions ombudsman.
Under legislation the Ombudsman is statutorily independent of the Minister. If this provision is deleted, nobody can remove the officeholder, even if circumstances change. This is a standard provision in legislation regarding other ombudsmen and, on balance, it is better to have it.
How does the Minister intend to recruit a person for the job? Will there be a general advertisement for the position?
We will do something along those lines. There are a number of ways of choosing a pensions ombudsman. It is a specialised area. We have not yet given much thought to the appointment.
When does the Minister hope the person concerned will be in place?
He or she should be in place shortly after the Bill has been passed. We have yet to address the mechanism, but it will probably be by advertisement in the newspapers.
Can somebody with international experience in this area apply?
They could very well do.
Amendment, by leave, withdrawn.
Amendment No. 59 not moved.
Amendments Nos. 60, 62, 67, 71 and 78 are related and will be discussed together.
I move amendment No. 60:
In page 66, lines 17 and 18, to delete ", with the consent of the Minister for Finance,".
All of the amendments refer to the Minister for Finance. I do not know the reason he is involved. The Minister will probably tell me that this is a standard provision in legislation, but this is an issue in which the Minister for Social, Community and Family Affairs should be involved. We do not want a situation to develop where moneys cannot go directly to the office to fund it in an appropriate way because the Minister for Finance does not like the estimate of expenditure that comes to his office.
What will happen if, six or 12 months after the ombudsman has been appointed, the workload requires an additional number of staff in the office? There has to be a guarantee that funding will be available to back up requirements. Couching the legislation on the basis of the consent of the Minister for Finance is not the way to go. As Deputy Broughan said, this is a very important officeholder who will have huge responsibilities to rule on evidence put to him or her from various parties. We have to ensure the person concerned has maximum independence and flexibility, of which part will be to ensure the requisite number of staff will be in place to do the job. Too often the Department of Finance can have undue influence on legislation such as this. Money should be provided for the ombudsman to do the job. The Minister for Finance should not have any place in the legislation to deny the money required.
The Minister for Finance must have some view in regard to this matter. In practice so far, this standard provision has not presented a problem in regard to the Pensions Board. We obtained sanction for more staff than will ultimately be necessary, partly due to subsequent changes to the Bill that have removed some of the workload from the board. It is a standard provision that it be done with the consent of the Minister for Finance, which is the case in regard to any expenditure across my or any other Department, whether I sign regulations or legislation. Obviously, I propose my own amendments.
It is unduly restrictive, particularly as we go forward. This is an office that will shortly be operational and do very important work. I will propose an amendment later which would extend the look-back period to a much greater time span than the Minister proposes in the Bill. It is vitally important that the person in the office has funding available to him or her. There have been cases where the Department of Finance has not provided the requisite funding for people to do their jobs and I would not like such a situation to develop.
Amendment put and declared lost.
I move amendment No. 61:
In page 67, between lines 21 and 22, to insert the following:
"(b) a complaint made to him by or on behalf of an actual or potential beneficiary of an occupational pension scheme or PRSA who alleges that he has sustained financial loss occasioned by reference to the best known market indices which measure growth in value of equities, other investment products, gross domestic product and property;”.
The amendment relates to the functions of the pensions ombudsman to investigate certain complaints and disputes. Section 131(1)(c) of the Bill refers to a complaint or dispute falling within a category prescribed by regulations made by the Minister. I am seeking to make it very specific, in line with amendments I proposed this morning, in order that it reads, “a complaint made to him by, or on behalf of an actual or potential beneficiary of an occupational pension scheme or PRSA who alleges that he has sustained financial loss occasioned by reference to the best known market indices which measure growth in value of equities, other investment products, gross domestic product and property.”
In paragraph (a) there is reference to a person who alleges that he or she has sustained financial loss occasioned by maladministration. Could this also be taken to mean bad management of a portfolio of investments if decisions are badly made? To some extent, what is envisaged by the Bill could be construed to include the issue I am trying to raise under the amendment. There has to be some accountability and transparency that people will be held to the highest achievements of comparable products.
The legislation does not go far enough. Perhaps when the review is being made this difficult area of how PRSAs might be evaluated will be addressed to some extent. I was struck by the debate in the Seanad that someone with experience in the area should feel very strongly about the matter. I agree with the point made that the capacity for ripping people off is immense and that there does not seem to be any comeback for investors who suffer as a result of bad practice.
If in the future this is interpreted by the Supreme Court, the issue could be included within the meaning of maladministration. I would prefer, however, to insert the amendment on the basis that there should be some standard of accountability. We can only go on the experience of those who come forward, but one example raised in the public domain concerned employees of The Irish Press, some of whom were represented by me and some of my colleagues. There were deep concerns about the administration of a particular fund.
The feeling was that there was no fraud, but that there was underfunding or that the fund was placed in the wrong kinds of investment in respect of the workers concerned who believed they were short-changed when the time came to pay out benefits. By contrast, there were other funds in the Irish Press Group, to which journalists, for example, belonged, which seemed to perform better.
Perhaps we have achieved the desired effect based on the Minister using the word "maladministration". Perhaps we should make it clear that there could be a comeback or that one could be held to account if one makes a bags of it, if one has expertise as a fund manager.
There is no definition of "maladministration". If there was, the issue to which Deputy Broughan referred would be solved. Having read the Bill, I notice that maladministration and misinformation could be confused. It is very subjective as to what exactly they mean.
In my legal training a differentiation was made between malfeasance and misfeasance. We could include a definition in the Bill, but it would not be exhaustive. Ultimately, it would be left to the courts to decide what constituted maladministration. Perhaps one would be better off leaving it as it is because one man's definition of "maladministration" might be different from somebody else's. Maladministration, to my mind, means somebody doing something on purpose that has the effect of placing people at a disadvantage. Mismanagement of a fund by negligent administration or management, rather than fraudulent administration, would not be caught.
I will return to the age old example of malfeasance, as we used to know it. If a county council fixes a pothole and one falls into it, it is a case of malfeasance. If the county council does not do anything with the pothole and one falls into it and injures oneself, it is a case of misfeasance and it is liable. In this instance, it will be interpreted strictly by the courts in terms of the managing of the administration rather than the managing of the fund. That is what we are getting at. In the light of the original point I made about the first few amendments, we could not have either the Pensions Board or, in this instance, the pensions ombudsman, making judgments on whether a fund performed well. That would not be within their remit.
If a product was managed very badly in market terms, surely that would be a cause for concern. It is on the basis of complaints that the ombudsman can intervene. Could he or she use this provision to include management of the fund?
If he or she believed that it was administered in such a reckless way that it led to a very poor performance by a fund, leaving it undefined could give him or her the option of interpreting it in that way. If we start to define it, we will have to say what constitutes maladministration. It could then be said it was definitely not mismanagement of the fund and was, for example, a case of the fund manager not shoving paper around at the appropriate time.
Amendment, by leave, withdrawn.
Amendment No. 62 not moved.
Amendments Nos. 63 to 65, inclusive, are related and may be discussed together.
I move amendment No. 63:
In page 67, line 44, to delete "Ombudsman-" and substitute the following:
"Ombudsman. It shall be a matter for the Pensions Ombudsman to determine what complaints or references under this section shall be investigated and a determination made thereupon.".
This is one of the key issues in the Bill. I know the Minister made progress in respect of allowing a greater look-back period. I think the original period was three years. It is now six. If we are genuinely trying to put in place a completely independent ombudsman to do the job as set out in legislation, we need to give the person concerned maximum independence and flexibility.
As is currently the case in subsection (4), pages 67 and 68, we are trying to tie the hands of the ombudsman. There is no need for any of the references to the issue of complaint and the time when the complaint occurred. I propose in amendments Nos. 63 and 64 that dealing with these issues would simply be a matter for the pensions ombudsman. The amendment reads, "It shall be a matter for the Pensions Ombudsman to determine what complaints or references under this section shall be investigated and a determination made thereupon."
There are many pensioners who have questions to ask in respect of the management of their pension schemes in recent years, as the Chairman well knows. While the issue of retrospection is debated regularly, it is a difficult one to call. We have got to give, in this legislation, maximum powers to the ombudsman to allow him or her to investigate whatever he or she likes. Where an initial complaint or representation is brought to the ombudsman's office, he or she should be able to look at it very quickly, determine whether it requires additional investigation, an oral hearing or written representations. He or she could then determine the facts as he or she sees fit.
As I said in my Second Stage contribution, I am very much opposed to putting any time limit on this officeholder to do his or her job. It may well require additional resources as I said in response to other amendments. It is important that there is maximum independence and that we do not go forward with the time limits the Minister is proposing. I am aware of a general provision he is making that the ombudsman can investigate other matters, but we need to be as flexible as possible in this regard in order that those who believe they have a genuine grievance, which has not been recognised by the Pensions Board because it could not do so on the basis of the information that it had available to it, can be treated appropriately by an ombudsman with maximum control and independence. The best way to do this is by accepting my proposals in amendments Nos. 63 and 64.
I add my voice very strongly. In amendment No. 65 I propose to remove the look-back time limit. I have received a lot of correspondence since last summer on this issue. I have received about 30 submissions, perhaps more. A typical one is from a pensioner who writes:
I have been agitated for many years by the establishment of a Pensions Ombudsman because of three factors:
1. The ability of a large Irish company and its UK parent to resort with impunity to unbelievable subterfuges in order to cover up that, during a particular period, the Irish company had applied pension increases in a way which was (a) blatantly unfair, (b) in breach of the Pensions Act, and (c) in breach of the rules and procedures of the pension scheme.
2. The repeated unwillingness (sometimes by way of subterfuges) of the Pensions Board and the Department of Social, Community and Family Affairs to address and be seen to address the substantial evidence produced by me in support of the allegations referred to above.
3. My belief that both public bodies are reluctant to address this evidence because they are party to and/or aware of the specious reasoning which accounted for the Irish company being given approval (probably from the Revenue or Pensions Board) for applying the irregular increases referred to above.
I thought that my fight for justice was finally rewarded when I learned in September last that the Pensions (Amendment) Bill 2001 would provide for the establishment of a Pensions Ombudsman. However, on reading the Bill I discovered that it included a clause in Section 131 which would preclude me from raising the above issues with the Pensions Ombudsman as the acts given rise to issues will have arisen more than 3 years before the enactment of the Bill. This exclusion does not apply to complaints after enactment.
He then goes on to say that he raised the issues with the Minister on 5 September 2001 and received no satisfaction. The Minister's reply did not address the substantive issue. That is typical of about 30 submissions I have received from different companies, some of which I mentioned in my speech on Second Stage. I referred to the Irish Press Group, the retired Tara Mines workers and the Ford Motor Company. A lot of them relate to the management of surpluses and indexation. That is a fundamental issue which runs through them all. This legislation seeks to establish a new and important public office. Pensioners welcome it because they feel that they now have someone who can fight for them. People are familiar with the insurance ombudsman, but the problem is that it stems from the industry and is not an independent national office. People had hoped that the ombudsman would come to grips with the unfair underfunding, use of the surplus or failure to keep up with inflation in indexation. I know the Minister has yielded a little on this.
We have PRSAs and other things have happened in recent years. However, the big issues brought to our attention tend to date back ten or 15 years. Maybe it would be for the best if the ombudsman was able to look at the entire area. Clearly a lot of these schemes will be brought to his or her attention fairly quickly. The person whose letter I quoted mentioned that he could apply to the court for the Pensions Board to address the evidence that substantiates the claim of his group. This legislation is a great step forward. It seems terrible that the Minister is not prepared to accept either of our amendments and give the ombudsman free rein. I am sure if it is something that affected a relatively small number of people a long time ago it could be thrashed out fairly quickly. I understand the fears that the office might be bogged down. As Deputies, we are used to getting correspondence relating to intractably difficult cases that have gone on for years. The Minister should allow an open-ended look-back because of the nature of pensions.
There has been no unrestricted look-back for any previous ombudsman. The scope for a look-back prior to legislation is very restricted. We have looked back six years. We have looked at this again since the Bill was in the Seanad but we cannot go back any further. There are 86,348 schemes encompassing 629,801 people. It only takes a few disgruntled people to seek a look-back and the pensions ombudsman's office would be inundated with claims and queries for schemes that may go back as long as 40 years. Some of the major schemes that are causing difficulty go back that far. Personally I have a lot of sympathy for those people. Someone evidently took his or her eye off the ball in the framing of the trustee documents. I have often spoken of one substantial scheme where I have much sympathy for the people involved. When I asked them to produce the trustee papers it did not require a legal expert to see that they were excluded from the position that was at issue. When I read it out to them they immediately accepted that, even though they will not accept it publicly. In many cases people did not perhaps have the wherewithal to question what was included in the document on their behalf. The Deputy asked what their representatives were doing at the time.
What is the average length of time a person is a pensioner?
Nine years.
What about allowing for a ten year look-back?
It is a matter of whether one can allow the office of the ombudsman to be inundated at the initial stages. Six years is quite a long time. As I said in the Seanad, the reference in the Bill to the action in section 131 allows flexibility of interpretation. This would obviously have to be determined by the ombudsman. It is similar to the amendments to the Civil Liability Act, 1961, regarding the taking of legal actions. There used to be a strict ruling that one could not take a legal action more than three years after the event. There has been a dramatic change based on a court decision. It related to when the person first became aware of the act which caused them the injury. To a certain extent that has opened the claims floodgate. That is one of the reasons we have such an amount of claims in this jurisdiction.
There is a provision in the legislation similar to that in the Civil Liability Act where reference is made to the act. It states:
The Pensions Ombudsman may investigate a complaint or dispute under this section notwithstanding that the act giving rise to the complaint was done prior to the establishment day if, and only if, the complaint or reference is made to the Pensions Ombudsman within the period of 6 years from the date of the act giving rise to the complaint or reference.
We have taken legal advice on this and it is open to interpretation when that six years starts. The ombudsman will have some discretion in this. He or she could ask when the person concerned first became aware that he or she was disadvantaged and had a source for a complaint.
If that is not within six years of the date of the act giving rise to the complaint, it could lock out people who have been making complaints to us. The Minister has been saying there are 86,000 plus schemes. The bulk involve people getting benefits, who are paying into the scheme and are happy with their lot. The problem for the minority - including some high profile cases - is that there is no closure for them.
The other issue is that we are not talking about companies which have gone out of business and are not paying into schemes. In many respects, they are existing large Irish companies which have not met their obligations. That is the point - it is not a question of fly-by-night companies.
I would hesitate before saying they have not met their obligations. In many cases one will find that they are strictly interpreting the trust documents. If, as the Deputy says, they were not complying with their obligations, it would be easy to take an action against the trustees or the scheme because the people concerned would not be getting their due entitlements. They are not taking that route because of all the advice received. I have received a myriad of complaints to my office and when one gets to the nub of it, one finds that the reason they are coming to people like us is that there is no legal justification for what they are saying.
Surely, that would make the argument that the intention of the amendments is to give maximum discretion. If the people concerned presented at the office and the ombudsman took a quick look at what they had to say, he or she - or his or her staff - would know that there was not a good enough case to take forward and the people concerned did not have good enough grounds for their complaint.
I still do not see the difficulty in allowing this look-back because we are giving ultimate discretion to the ombudsman. We are asking him or her to look at these complaints and make an initial judgment on them. As the Minister knows, up to now the Pensions Board has not been able to make these judgments on the basis of the facts before it. There is a need to give the office the right start. It will become obvious to the ombudsman quickly, on the basis of documents submitted to the office, whether there is a case to be answered by the trustees and the scheme concerned.
That is a good point. Very often what people are looking for is closure. An expert, as the ombudsman will be, is the best person to look at the matter. He or she may decide that it is not a case of gross maladministration or one for the national bureau of fraud investigation, but rather it is inherent in the rules of the scheme that trustees have accepted during the years. I imagine the big chestnuts will be dealt with relatively quickly.
I do not know if that is the case, but I make the point again that in the six year look-back and the interpretation by the ombudsman of when the person concerned first became aware of the act there will be substantial flexibility in what he or she can do. We must balance the fact that we are legislating for the future and I must be careful not to clog up the system. The strong advice is that the system would be clogged up and that the ombudsman would not be able to get off the ground in relation to future issues to do with pensions if he or she was dealing with issues that relate to the past. It has also been said that people, irrespective of whether their "claim" is statute barred, would make a claim or complaint to the ombudsman leading to appeals to the High Court resulting in the entire process becoming even less flexible.
Sitting suspended at 3.25 p.m. and resumed at 4.10 p.m.
We were going around the houses on amendment No. 63. Without summarising everything he has said, does Deputy Hayes wish to make one last comment?
No, Chairman. I will just press the amendment.
Amendment put and declared lost.
I move amendment No. 64:
In page 67, to delete lines 45 to 53, and in page 68, to delete lines 1 to 12.
Amendment put and declared lost.
I move amendment No. 65:
In page 68, lines 17 to 20, to delete all words from and including "if" where it firstly occurs in line 17, down to and including "reference" in line 20.
Amendment put and declared lost.
I move amendment No. 66:
In page 68, between lines 20 and 21, to insert the following:
"(6) The Pensions Ombudsman shall not investigate or determine a complaint or dispute unless the procedures referred to in section 132 have been resorted to and exhausted in accordance with their terms.".
This amendment has been inserted to clarify that the procedures for internal dispute resolution for an occupational pension scheme or PRSA, as set out in section 132, must be exhausted before the ombudsman can investigate or determine a dispute or complaint.
Amendment agreed to.
I move amendment No. 67:
In page 69, line 1, after "Minister" to insert ", with the consent of the Minister for Finance,".
Amendment agreed to.
I move amendment No. 68:
In page 69, lines 48 and 49, to delete "Subject to the prior approval of the Minister, the" and substitute "The".
This is another formulation of the argument I made earlier. I am seeking to remove the phrase "Subject to the prior approval of the Minister, the Pensions Ombudsman may from time to time engage such consultants". If we are serious about the independence of the office, why should the ombudsman have to go to the Minister to bring on board consultants or advisers as he or she deems necessary? I presume the Minister will make the argument about the financial implications and so on. However, it seems strange that the ombudsman cannot engage consultants or advisers when he or she believes it necessary without the prior approval of the Minister.
In the normal course of events the ombudsman would have a budget provided from the Department's Vote. If the provision regarding the Minister's approval did not exist and, for example, the ombudsman ran up a significant bill for consultants, it would be asked whether any check was in place. This provision is a check and a balance, but in reality there would be a certain level of agreement with regard to what can be spent on consultants. That is the same for any body under the aegis of a Department. Considerable difficulties would arise if this provision was not included in the Bill.
I will not labour the point. Presumably the procedure will operate on the basis that the ombudsman sends to the Department an estimate of expenditure for the next year, part of which relates to consultants or advisers if he or she deems it necessary.
That is correct. However, if, during the year the ombudsman decided to take on a multimillion pound contract, there would be little the Department could do to stop him or her entering discussions without some sort of hold.
One of the points raised by the former UK ombudsman who came here last September to speak at a conference, at which the Minister also spoke, was that one of the defects of the British legislation was that the ombudsman could not delegate responsibility to people beneath him or her. Is there such a provision in the Bill as proposed?
The ombudsman can delegate everything within his or her remit except the determination. The ombudsman must make that determination.
Amendment, by leave, withdrawn.
I move amendment No. 69:
In page 70, line 48, to delete "any court" and substitute "the High Court".
This section deals with a stay in court proceedings where a complaint is made. By proposing "any court" does the Bill not make it easier for people to stay proceedings? Would it not make more sense to stipulate the High Court? If someone wished to place a stay on proceedings, the higher the court, the greater the cost. It is immeasurably cheaper to secure a stay if the provision refers to "any court". Would this not encourage more third parties to seek a stay?
Restricting the provision to the High Court would limit the ability to make a complaint.
If, for example, someone makes a complaint against a provider of any scheme who decides to seek a stay on proceedings for whatever reason, it is very easy for that provider to go to any court. It would be cheaper to go to the Circuit or Districts Courts. The Minister has pointed out that stipulating the High Court places the bar higher in terms of securing a stay. Does the Minister understand my point?
Yes, but if one exclude the Circuit Court there would be no power to stay proceedings. If the proceedings were in the Circuit Court and the Bill restricted the provision to the High Court, there would be no power to stay proceedings in the Circuit Court in the event of a complaint.
There is no power in the Circuit Court.
I would not have thought so, unless we provide for it. That is why we have used the phrase "any court".
When reading the Bill I thought this was an opportunity to reduce the possibility of staying proceedings. Presumably the bigger the company or the bigger the potential loss it will suffer, the more recourse it will take to the courts.
Yes.
Amendment, by leave, withdrawn.
I move amendment No. 70:
In page 72, between lines 37 and 38, to insert the following:
"(11) The Pensions Ombudsman may, of his own volition, refer an investigation file to the National Bureau of Fraud Investigation of An Garda Síochána and to the Director of Public Prosecutions.".
This amendment concerns an issue about which I asked earlier. If the pensions ombudsman receives a complaint he or she will investigate the matter and will make a determination. However, does the legislation make it sufficiently clear that the ombudsman has an obligation to pursue a matter with the Garda, the Director of Public Prosecutions and the National Bureau of Fraud Investigation? The Minister is a lawyer. Will the office of the ombudsman not be similar to tribunals in the sense that all its investigations would have to be reinvestigated by the National Bureau of Fraud Investigation if there is to be a successful prosecution in the case of gross maladministration amounting to fraud? Should we not include in the Bill a specific remit in this regard, given that we have had some famous cases? On Second Stage I referred to one such case which seemed to constitute an outrageous fraud.
I agree with the portent of the Deputy's proposal and we will consider the matter further before Report Stage. I will have to take legal advice in the meantime.
Amendment, by leave, withdrawn.
Amendment No. 71 not moved.
I move amendment No. 72:
In page 73, between lines 23 and 24, to insert the following:
(4)(a) Nothing in this section shall prevent any of the parties to the investigations seeking an oral hearing from the Pensions Ombudsman.
(b) The decision to grant an oral hearing referred to in paragraph (a) shall be a matter solely for the discretion of the Ombudsman.”.
This amendment proposes that any parties to an investigation shall be able to seek an oral hearing with the pensions ombudsman. The amendment is broad in its definition in that it proposes that "The decision to grant an oral hearing referred to in paragraph (a) shall be a matter solely for the discretion of the Ombudsman.” Perhaps the Minister will tell me if this power already exists. Many of these problems could be ironed out if an oral hearing was part and parcel of the functions of the ombudsman.
Under the Bill the conduct of the investigation, including whether to hold an oral hearing, is a matter for the ombudsman. In this regard a person could make whatever representations he wishes to the ombudsman, so the amendment is unnecessary. We would like to give the ombudsman as much discretion as possible - I believe that is what the Deputy is trying to do - on the issue of holding an oral hearing.
It is, therefore, already included.
It is already in here.
Amendment, by leave, withdrawn.
Amendment No. 73 is in the name of Deputy Broughan. Amendment No. 74 is related so it is proposed to discuss amendments Nos. 73 and 74 together, by agreement.
I move amendment No. 73:
In page 73, to delete lines 32 to 42.
This amendment concerns cases where the ombudsman makes a determination on a complaint and may give directions as he considers necessary but we specifically exclude any amendment of the rules of the scheme, the conditions of the PRSA contract or the substitution of the decision of the pensions ombudsman for that of the trustees. How will that work in practice? If, for example, the rules or some of the decisions made by the trustees, using their discretionary power under the scheme, had been seriously deficient, would it not be reasonable to expect the ombudsman to give a direction that changes be made to the PRSA or to the scheme that would remove any faults that existed previously which may have led to the complaint in the first place? I do not understand how that can work if we do not give that type of power to the ombudsman.
The determinations of the ombudsman are binding subject to an appeal to the High Court. The proposals the Deputy is making are not considered reasonable from the perspective of the pensions schemes and the employers as they could put at risk the viability of a scheme from a cost perspective. They could also lead to the closing down of schemes as employers might feel that they could not risk any case being referred to the ombudsman on any issue. The Deputy is putting a particular onus on the schemes which might cause them to fold up.
If the Minister made a determination under the rules which led to additional benefits being granted to the contributors in a scheme, surely he would not allow the same inappropriate rules to continue into the future. The issue of winding up a scheme may arise anyway because what would be the point of a scheme which the ombudsman has determined deprived people of benefits to which they are entitled? I do not like to hear the Minister raising the issue of cost but even in the debate we had last night we talked about giving a response to needs assessment for carers or people with a disability. If there are absolute rights to particular benefits guaranteed in legislation, the scheme in this case, by definition, would have to ensure those benefits accrued. Are we not restricting the power of the ombudsman in this case and therefore taking away from the large benefit that might flow from it? I understand that if the ombudsman criticises a particular scheme or PRSA, future providers will not make the same mistake, but how does that help people in existing schemes who believe they have been deprived of some benefits to which they are entitled?
The experience, particularly in the United Kingdom, has shown that we have to be careful on these issues because quite a number of schemes in the UK have closed down as a result of over-regulation. What we have put in here is a balance which will ensure that there is not a run on these schemes in the event of substantial complaints being made to the ombudsman which might end up in the High Court, with huge costs involved.
In relation to a standard PRSA or the way trustees might operate, does the Minister see it as part of the ombudsman's remit, say, five years from now or into the future, to have models of good practice in relation to determinations?
I would not see a problem in that.
Amendment, by leave, withdrawn.
I move amendment No. 74:
In page 74, lines 1 and 2, to delete "but shall not exceed any actual loss of benefit under the scheme or PRSA" and substitute "and shall have reference to the best known market indices which measure growth in value of equities, other investment products, property and gross domestic product".
This amendment relates to a determination in a case where the ombudsman is restricted to an actual loss of benefit. I tried to extend that to include the best possible indices of what could have been achieved under the scheme. I wondered how that would be calculated and whether there would be any actual loss of benefit. Surely the ombudsman would have to look at the market to some extent in relation to some investment products, but it is the same point I made in the debate on the first series of amendments, so I withdraw this amendment.
Amendment, by leave, withdrawn.
I move amendment No. 75:
In page 74, line 37, to delete "Minister" and substitute "Pensions Ombudsman".
This amendment relates to the enforcement of determinations of the pensions ombudsman. There is a reference in line 37 to "the Minister". Why is the Minister making the application? Why is it not being made by the pensions ombudsman?
We felt it would be more appropriate for the Minister to do the enforcing, but I can have a look at that for Report Stage. The advice of the Attorney General's office was that it should be the Minister rather than the pensions ombudsman.
On the basis that the pensions ombudsman makes the determination and it is not being enforced.
Yes. It is up to the Minister to——
If he makes a number of determinations, they will land back on the Minister's desk for enforcement.
Yes. That is why we are willing to look at it again. I am not sure what the precedent is for other areas but we will have to look at it.
Perhaps the Minister will look at it with a view to putting a limit on it. It would be another cog in the wheel if the Minister was once again involved in enforcement. It should be a matter for the pensions ombudsman, not the Minister.
There is a question of independence as well.
It would be challenged in the courts on the basis of a point of law. I do not know how else it can be determined. If a determination is made and it is not being enforced, I would have thought it would be the pensions ombudsman's job to enforce it.
I would not disagree. We will have a look at it.
Amendment, by leave, withdrawn.
Amendment No. 76 is in the name of Deputy Broughan. Amendment No. 77 is related so the proposal is to discuss amendments Nos. 76 and 77 together, by agreement.
I move amendment No. 76:
In page 76, line 28, to delete "3" and substitute "2".
This is a little reminiscent of the first debate we had on Comhairle when the Minister set up a new office. I thought that in line 28, three years seems a long time in relation to the statement of strategy. Obviously the basic statement is submitted within a year and after that every three years. While pensions are a long-term investment the time could be shorter.
The reason three years was decided was that that is a standard period for the drafting of strategy statements for virtually all the agencies under our remit and, I think, most other Departments.
Amendment, by leave, withdrawn.
I wish to ask a question on section 141. Where the ombudsman makes a determination did the Minister consider telling someone to pay up, and in respect of a complaint being brought against a third party is there power to impose interest on those who do not comply in a sufficiently swift manner with the determination?
Under that section which allows someone to go to court, it would be open to the court to charge penalties.
Impose penalties.
Yes. That is under their normal remit.
Amendments Nos. 77 and 78 not moved.
I move amendment No. 79:
In page 77, to delete lines 32 to 35.
The amendment relates to the staff of the pensions ombudsman. The provision contained in section 145(1)(b), which appears odd, reads: “The power of appointing a person to be an officer or servant of the Pensions Ombudsman shall be vested in the Minister.” I would have thought that if the ombudsman was making a proposal for an estimate of expenditure it would be up to him, not the Minister, to hire and fire people. If every additional appointment to the office has to go back to the Minister and the Department, that is over-regulation and is crazy.
No matter which way it is set up, that is the way it would have to be. Subsection (3) of the same section states: "The Minister may delegate to the Pensions Ombudsman the powers exercisable by him under the Civil Service Commissioners Act .. ." We are not setting up the ombudsman's office as a body corporate on its own. This is the exact same way it was done in relation to pension service ombudsmen. What we are doing is in line with the Civil Service Acts and no more. It is not to try to restrict the ombudsman in respect of staff. It is common procedure to do it this way.
We had a discussion earlier on Deputy Hayes's amendment, which we supported, in relation to the Oireachtas committee. In terms of the Committee of Public Accounts, would the ombudsman be the accounting officer of his own agency?
It would be the Secretary General of my Department.
The Minister is setting this up in the context of the existing legislation for civil servants. Is that how it is done in the UK?
I do not know.
I am not suggesting the Minister would abuse this power but for future reference, if a Minister got into sticky water with an ombudsman for whatever reason, this power could be invoked to not appoint staff to the office. Consequently, he or she can decide at any time in the future not to appoint these additional staff. We are all aware of relationships breaking down between key officers and a Minister.
That is the way life is. If one wants to appoint staff one has to go through the Department of Finance. That is the reason it is set up in this way under the Civil Service Acts.
How stands amendment No. 79?
I wish to have it put for the sake of it.
Amendment put and declared lost.
Question proposed: "That section 5, as amended, stand part of the Bill."
I wish to ask a question on section 145 which deals with disclosure of information. Does any of this come under the provisions of the Freedom of Information Act?
Not yet.
It is not set up yet.
Yes.
Will it come under the provisions of the Freedom of Information Act?
Are any of the other pension ombudsmen subject to FOI? I am not sure. We can check it.
Yes.
I do not think they are because this is regarded as the last line. It is interesting, but to the best of my recollection the ombudsman is not subject to FOI. The idea of the ombudsman is the same as FOI.
They do not publish determination documents.
We can check it.
Question put and agreed to.
Section 6 agreed to.
SECTION 7.
I move amendment No. 80:
In page 80, line 21, to delete "offence.'; and" and substitute the following:
"offence.
(b) Where a person of whom a requirement is made by the Pensions Ombudsman under subsection (1) or (2) of section 137 fails to comply with that requirement, he shall be guilty of an offence.’;
and".
This amendment arises directly on foot of an amendment on Report Stage in the Seanad. The purpose of the amendment in the Seanad was to allow pensions ombudsmen to bring proceedings for a summary offence under the Pension Acts in relation to his jurisdiction. This amendment reinserts the actual reference to the offence in the context of the ombudsman which was inadvertently omitted on Report Stage.
Amendment agreed to.
Section 7, as amended, agreed to.
Sections 8 and 9 agreed to.
SECTION 10.
Question proposed: "That section 10 stand part of the Bill."
I welcome the fact that the Minister has included the rights of part-time workers in this section.
Question put and agreed to.
Sections 11 and 12 agreed to.
SECTION 13.
I move amendment No. 81:
In page 83, line 1, after "Minister" to insert "and the appropriate Oireachtas Committee".
We had a debate on this matter already. I am trying to get an involvement for the committee on all these matters that relate to the Act.
This amendment is not considered appropriate given the operation of the board in relation to its advisory role to the Minister. However, the board has appeared before committees of the Houses and will continue to do so. If an Oireachtas committee wished to ask for the board's advice on an issue it could do so directly or through the Minister, depending on the nature of the request.
I accept that.
Amendment, by leave, withdrawn.
Section 13 agreed to.
Sections 14 to 20, inclusive, agreed to.
SECTION 21.
I move amendment No. 82:
In page 87, lines 1 and 2, to delete paragraph (b) and substitute the following:
"(b) in subsection (2) by the substitution for ’paragraph 1 or 3 or both’ of ’any or all of paragraphs 2, 3 and 4’.”.
This is a technical amendment which rectifies an error in relation to quotation marks.
Amendment agreed to.
Section 21, as amended, agreed to.
SECTION 22.
Amendments Nos. 83 and 86 are related and may be discussed together.
I move amendment No. 83:
In page 87, to delete lines 50 and 51, and in page 88, to delete lines 1 to 23 and substitute the following:
"(i) in paragraph (b) by the substitution for ’for the purposes of this Act.’ of ’for the purposes of this Act, or’; and
(ii) by the insertion of the following paragraphs after paragraph (b):
'(c) in the making of a payment to another scheme which is not a funded scheme, which provides or is capable of providing long service benefit, of which he is a member or a prospective member and the trustees of which are willing to accept payments made under this paragraph, or
(d) where so prescribed, and in accordance with such conditions as may be prescribed, in the making of a payment to the trustees, custodians, managers or administrators of an arrangement for the provision of retirement benefits established within the State, not being an arrangement of the kind mentioned in paragraph (a), (b) or (c), or
(e) where so prescribed, and in accordance with such conditions as may be prescribed, in the making of a payment to the trustees, custodians, managers or administrators of an arrangement for the provision of retirement benefits established outside the State.’;
and
(c) by the insertion in subsection (6) after ’subsection (3)(a)’ of ’or (c)’.”.
These amendments concern the issue of buy-out bonds which we debated earlier. A buy-out bond is an insurance policy designed to accept a transfer of payment from an occupational pension scheme. The intention in the Bill, as originally published, was to abolish buy-out bonds and replace them with PRSAs. However, these two amendments restore buy-out bonds in certain circumstances where they still have an important role to play. This arises from the policy decision to only allow moves from occupational pensions to PRSAs in certain defined circumstances, as set out in the tax provisions. Where a person has been a member of a pension scheme for over 15 years there cannot be a transfer of a preserved benefit to a PRSA but only to a buy-out bond.
I welcome that news. In the original proposal the Minister removed it. I assume there was a good deal of consultation about that.
Yes.
Amendment agreed to.
Section 22, as amended, agreed to.
Sections 23 to 30, inclusive, agreed to.
SECTION 31.
Amendment No. 85 is related to amendment No. 84 and they be taken together by agreement.
I move amendment No. 84:
In page 92, lines 43 and 44, to delete "(being such a certificate having an effective date after 1 June 2002)" and substitute "having an effective date after 1 June 2002".
These amendments are to clarify the provisions in relation to AFCs. The first amendment is to clarify that the reference is to the first AFC after 1 June 2002 and not the first AFC. The second amendment is to clarify that AFCs, actuarial funding certificates, with an effective date before June 2002 have a nine month period after 1 June 2002 when the old provisions in relation to AFCs continue to apply.
These will apply from June to March of next year,
Yes.
Amendment agreed to.
I move amendment No. 85:
In page 93, to delete lines 16 to 26 and substitute the following:
"(a) where an actuarial funding certificate relates to an effective date not later than 1 June 2002, the specified percentage shall be 0 per cent,
(b) where an actuarial funding certificate relates to an effective date after 1 June 2002 but not later than 1 June 2012, the specified percentage shall be the certified percentage,
(c) where an actuarial funding certificate relates to an effective date after 1 June 2012 and on 1 June 2002 the scheme concerned was a funded scheme, the specified percentage shall be 100 per cent.’.”.
Amendment agreed to.
Section 31, as amended, agreed to.
Section 32 agreed to.
SECTION 33.
I move amendment No. 86:
In page 95, to delete lines 22 to 26 and substitute the following:
"(b) the making of one or more payments under policies or contracts of assurance that are effected on behalf of the member with one or more undertakings (within the meaning of the Insurance Act, 1989) and that are approved by the Revenue Commissioners under Chapter 1 of Part 30 of the Taxes Consolidation Act, 1997, which policies or contracts of assurance shall not be deemed to be an occupational pension scheme for the purposes of this Act, or
(c) where so prescribed, and in accordance with such conditions as may be prescribed, the making of a payment to the trustees, custodians, managers or administrators of an arrangements for the provision of retirement benefits established within the State, not being an arrangement of the kind mentioned in paragraphs (a) or (b),”.
Amendment agreed to.
Section 33, as amended, agreed to.
Sections 34 to 38, inclusive, agreed to.
SECTION 39.
I move amendment No. 87:
In page 98, line 26, to delete "to be equal" and substitute "that is so provided being equal".
This amendment is to ratify an inconsistency between the language used in section 56(a)(i) and 56(a)(ii)(b) which both set out the same type of guarantee that must be contained in the rules of an occupational scheme in order for a scheme to be exempt from the indexation provisions.
Amendment agreed to.
Section 39, as amended, agreed to.
Section 40 agreed to.
SECTION 41.
Amendments Nos. 88 and 89 are related and may be taken together by agreement.
I move amendment No. 88:
In page 100, to delete lines 20 to 52, and in page 101, to delete lines 1 to 8 and substitute the following:
"58A.-(1) An employer who deducts any sum from the wages or salary of an employee for remittance to the trustees of a scheme or to another person on their behalf, shall remit every such sum to the trustees or that other person on their behalf, as the case may be, within 21 days following the end of the month in which the deduction was made. An employer shall not make any deductions from the sum required to be remitted by him under this subsection.
(2) Where an employer is obliged (whether under a contract of employment, the terms of a scheme or otherwise) to pay any sum expressed as a cash amount or as a percentage or proportion of an employee's wages or salary (other than a sum deducted from the employee's wages or salary), on behalf of or in respect of that employee, to the trustees of a defined contribution scheme or to another person on their behalf, he shall, within 21 days following the end of every month, pay to the trustees of the scheme or that other person on their behalf, as the case may be, a sum equal to the appropriate cash amount or percentage or proportion of every payment of wages or salary made to that employee during that month. An employer shall not make any deduction from the sum required to be paid by him under this subsection.
(3) An employer who-
(a) deducts any sum from the wages or salary of an employee for remittance to the trustees of a scheme or to another person on their behalf, or
(b) is obliged (whether under a contract of employment, the terms of a scheme or otherwise) to pay any sum, on behalf of or in respect of an employee (other than a sum deducted from the employee’s wages or salary), to the trustees of a defined contribution scheme or to another person on their behalf,
shall give or cause to be given to the employee concerned and to the trustees or that other person on their behalf, a statement in writing not less frequently than once a month specifying-
(i) the total amount deducted from the employee's salary or wages and remitted to the trustees or that other person on their behalf, as the case may be, and
(ii) where appropriate, the total amount paid, on behalf of or in respect of the employee (other than any amount deducted from the employee's wages or salary), to the trustees or that other person on their behalf, as the case may be,".
This amendment relates to the remittance of PRSA contributions by employers and trustees. Section 41 places a statutory requirement on employers to remit employee and certain employer pension contributions within 21 days of the end of the month in which the deductions were made where employee contributions are concerned and to give monthly statements of the deductions to the employee and trustees.
These amendments arose from certain concerns raised in the Seanad debate. The first amendment arose from the use of the term "administrator" and the term "manager". It was felt that these terms were not broad enough to encompass the circumstances for which they were envisaged.
In amendment No. 89, I propose the trustees will have to invest the moneys they receive within ten days of when they should have been paid over by the employer. Overall, this would give a maximum of 31 days from the end of the month in which the payment was made by the employee to when the money was applied for his or her benefit by the trustees. This arose from the points made by Senator Ross in the debate in the Seanad.
That arose from points that were made by a gentleman in Galway who had been watching the proceedings on the Bill. The Minister included a stipulation of 21 days, that an employer must hand over the moneys within 21 days. Within how many days did the Minister say this provision will ensure the administrator must invest the moneys?
Within ten days following the period of 21 days.
This provision will ensure that the administrator will not be able to hang on to this money.
That was the point made by Senator Ross and we agreed with it.
Amendment agreed to.
Section 41, as amended, agreed to.
SECTION 42.
I move amendment No. 89:
In page 101, line 30, after "received" to insert "and that the sums referred to in subsection (1) or (2) of section 58A are invested in accordance with paragraph (b) within 10 days of the latest date on which those sums should have been remitted or paid by the employer under subsection (1) or (2), as the case may be, of section 58A”.
Amendment agreed to.
I move amendment No. 90:
In page 101, between lines 34 and 35, to insert the following:
"(c) to ensure that where an ongoing surplus exists in an occupational pension scheme, an employer shall continue to make his normal contributions and shall not take a so-called contribution holiday;”.
This is an amendment to section 59 of the Principal Act dealing with the general duties of trustees of schemes, which involve the proper investment of resources, membership and the keeping of proper records. In this amendment I seek to address the problem brought to my attention concerning a number of schemes in which there is an ongoing surplus and where, by virtue of that, employers might take advantage by stopping the payment of due contributions for a period. I am talking about the rules governing schemes. What I propose in this amendment may be covered. Many pensioners are upset about the management of surplus funds in such schemes and feel they should be passed on to them as the people who made the contributions rather than used, perhaps, to some extent, to facilitate a stronger balance sheet for the company. This amendment proposes to include in the list of the general duties of trustees of schemes reference to how surpluses should be treated, having regard to the experience of contributors to such famous pension schemes as the Ford Motor Company, Guinness and others, who were strongly of the view that surpluses had not been dealt with favourably towards contributors.
As we discussed on amendment No. 10, occupational pensions operate on a voluntary basis. This proposal regarding a surplus in a scheme and the employer not being allowed to take a contribution holiday would lead to the disappearance of surpluses in the schemes. As the Deputy is aware, in the defined scheme it is the employer, not the employee, who takes the risk and must make up the balance of the cost if there is a shortfall. I accept that there are issues regarding surplus and I have tried to address this in section 39 dealing with indexation of pensions and payments. There has been a good deal of debate and discussion in the UK and, to some extent, here regarding the treatment of surpluses and deficits in pension schemes from an accounting point of view. This may lead to the demise of the defined benefit schemes. The Deputy's proposal would have a similar effect and I must, therefore, oppose the amendment.
I will put the amendment.
Amendment put and declared lost.
I move amendment No. 91:
In page 101, between lines 34 and 35, to insert the following:
"(c) to ensure that payments from an occupational pension fund shall be indexed to a level not less than increases in gross average industrial earnings;”.
This amendment also relates to the duties of trustees of schemes. I tabled it in response to a number of submissions I and most other Deputies received in the run-up to the taking of this Bill. The Minister referred to the provision for indexation in section 39. That would be an improvement on the current position. In this amendment I seek to ensure that the basic benefits are indexed to a level, as was sought during the debate last night. We are trying to index the benefit to the level of 27% or 30%. The NIPI report urged that 34% should be the basic index level. There was grave dissatisfaction with the position over the years. We spoke about the extent to which public sector employees will raise with the ombudsman when that office comes on stream some of these key pension issues such as parity and indexation. The last major demonstration I attended in this regard was the mass meeting of Aer Lingus and Aer Rianta pensioners who felt that the owners of these companies and the Government had not ensured that level of benefits was commensurate with the rise in income of existing employees and that they were being left behind.
We were happy to make a major commitment in that regard on behalf of the Labour Party and it is one I hope the Government wil l also take on board. Again, I am not sure if this is the most appropriate area to do so. The three issues are that the trustees should have some duties in relation to surpluses, indexation and the integration of schemes, with the famous clawback. The second amendment relates to indexation.
I agree that all occupational pension schemes should provide for indexation of pensions and payments and I believe we addressed this, in so far as we could, in section 39. It is probably a more appropriate and safer way to do it. The Deputy's proposal would impose a mandatory requirement in a voluntary regime and set this requirement at the level of increases and earnings which is not in keeping with the practice at present where indexation is provided. This usually relates to the lower rate of 4% and the CPI. Many public service schemes provide indexation related to earnings but these are seen as top-up provisions and would be extremely expensive to replicate in the private sector. This would have huge funding implications which would, again, lead to the demise of the fine benefit schemes.
In the future we will look at earnings and salaries. The National Centre for Partnership, under Peter Cassells, is starting the debate on the next programme. There were some innovations in the current programme where issues such as child benefit and so forth were addressed. What we are doing today also probably came within that remit. In that context, therefore, the real costs of business must include pension provision for employees if that is the case, it should be on the table as an issue that trustees would be responsible for this.
I agree but I cannot accept the amendment. I agree it is an issue that should be discussed in the new partnership agreement.
Amendment, by leave, withdrawn.
I move amendment No. 92:
In page 101, between lines 34 and 35, to insert the following:
"(c) to ensure than in any integrated payment of an occupational pension scheme with the state contributory scheme, that the employer shall only deduct the state pension from the occupational pension on a pro-rata basis in accordance with the percentage of the employer’s PRSI contribution and in a case of early retirement or redundancy, the state pension claw back shall be equal to the state pension’s value at the date of retirement or redundancy;”.
This is the third part of the extra duties that many pensioners, certainly those who made representations to the Labour Party, and trade union leaders would wish us to add to the duties of trustees under Part 6 of the Pensions Act. I am seeking to ensure integration. We have had the practice of deducting the State pension from an occupational pension. This practice of integration of the two systems is considered to be most unfair and, to some extent, to be defeating the purpose of what we are trying to do, which is to extend provision to include both the State pension and the occupational pension.
I am seeking that in any integrated payment of an occupational pension scheme with the State contributory pension the employer shall only deduct the State pension from the occupational pension on a pro rata basis in accordance with the percentage of the employer’s PRSI contribution. Pensioners have asked why they are not entitled to their segment of PRSI free of any impediment on their occupational pension. In the case of early retirement or redundancy, the State pension clawback should be equal to the State pension’s value at the date of retirement or redundancy. When an employee retires or is made redundant at 55 years of age, the State pension clawback, in fairness, should be frozen at its value then. While the company pension does not become active until the normal retirement age of 65, current policy is that the employer deducts the State pension at its value at the normal retirement age of 65 rather than its value at the actual date of retirement or redundancy, even though the person would not have paid PRSI in the intervening ten years.
An advocate for a number of famous pension schemes says that a State pension deduction should be at the value of the time of retirement or redundancy, 55 as in this example, pro rata in accordance with PRSI contribution. As an exercise, he says, one can compare State pension provision today against pension provision ten years ago. He strongly believes that State pension rates should be frozen at the age of early retirement or redundancies. His submission points up a huge issue, the integration of occupational pensions with State pensions. In so far as it is possible, we should try to reach a situation where people will have the second pillar. A number of people who were public sector workers in the semi-State sector and who retired at a relatively young age are in the fortunate position of having enough insurance to have a full State pension as well as their occupational pension, and that is good. We should encourage people to make the widest possible provision. This is an area I was anxious to highlight. Perhaps it should be addressed in the future in the context of the duties of trustees.
The issue of integration has received more focus because of the significant increases in social welfare pensions in recent times. In previous Social Welfare Acts I banned post-retirement integration to ensure it could not be introduced. The issue of integration at the point of retirement was discussed extensively by the commission on public service pensions which reported in 2000. While there were many areas of non-agreement in that commission, I understand its members all agreed to the principle of integration. This was because it allows an employer to top up the social welfare pension to provide an earnings related one.
There are issues regarding the operation of integration and I have asked the Pensions Board to examine them further. I do not agree with the Deputy's proposal because there could be unintended negative outcomes as a result. However, like other Members, I believe it is incongruous that people's State pension should be clawed back because of the increases.
Amendment, by leave, withdrawn.
Amendment No. 93 not moved.
Section 42, as amended, agreed to.
Sections 43 to 49, inclusive, agreed to.
SECTION 50.
Amendments Nos. 95 and 96 are alternatives to amendment No. 94 while amendments Nos. 96 and 97 form a related composite proposal and amendment No. 98 is also related. Amendments Nos. 94 to 98, inclusive, may be discussed together. Is that agreed? Agreed.
I move amendment No. 94:
In page 108, line 44, and in page 109, lines 1 to 14, to delete paragraphs (a) and (c) and substitute the following:
"(a) the substitution in paragraph 2 of ’16’ for ’14’;
(b) the substitution for clauses (g) and (h) of paragraph 8(1) of the following:
'(g) one shall be a representative of consumer interests,
(h) one shall be a representative of pensioner interests,
(i) one shall be a representative of the Minister for Finance, and
(j) one shall be a representative of the Minister.’;
and
(c) the insertion after subparagraph (7) of paragraph 8 of the following:
'(7A) The member of the Board representing consumer interests shall be a person nominated for appointment thereto by the Minister or such organisation or organisations as the Minister considers to be representative of consumer organisations.
(7B) The member of the Board representing pensioner interests shall be a person nominated for appointment thereto by the Minister or such organisation or organisations as the Minister considers to be representative of pensioner organisations.'.".
I am providing for representatives of consumer and pensioner interests to be added to the Pensions Board. This will give a better balance to the board. I considered the various representations made to me in regard to other interested groups and I am satisfied with these proposals. I decided to bring forward a proposal, following the debate in the Seanad, in relation to including a representative of pensioners' interests. It is ludicrous that we do not have a pensioner on the board. While I am reluctant to extend the numbers on the board, we need to have somebody representing pensioners.
Does that mean there will be 16 members?
There will be 17. It is a big board at this stage.
I propose to put another member on it. The Minister will have received representations from the insurance brokers. They feel aggrieved they have been omitted, given that actuaries, solicitors, accountants and insurance companies are represented. They believe they have a specific insight into the market. I have been told that about 90% of all single premium pensions are sold through insurance brokers and that 50% of all self-employed personal pensions and about 70% of individual and group pensions are sold through brokers. They make the point that there is a distinction between insurance companies and insurance brokers. They have asked that we might consider their inclusion on this board. These will be the key people in selling the product ultimately and they make the point that they have an input to make in policy that the board will be considering.
Amendment No. 98, which was written initially in long-hand, should read "the insurance brokering industry", instead of "banking". I welcome what the Minister is doing, particularly concerning pensioners' representatives. It would be ludicrous not to have a pensioners' representative on the board. The ICTU's pensioners' body or the Senior Citizens' Parliament could nominate a member for the board. Consumers' interests should be represented on the board as strongly as possible. On the existing Pensions Board there are some fine representatives of various areas of society, but there should be at least one pensioners' representative.
I concur with Deputy Hayes on the brokering industry. I met representatives of PIBA a few days after the Minister published the Bill and I received a good briefing from them on many issues. I dealt with the Minister's staff on those issues over the following three or four months and the Minister has now addressed most of the issues about which PIBA's representatives were upset. They were afraid because of what had happened in the United Kingdom where big companies squeezed out the small personal insurance advisers.
Most of us are dependent on having good local advice on insurance, from cars to homes. In such cases, it is important to have a good personal relationship, such as one would have with a doctor or solicitor. The insurance brokering industry fulfils a useful role in that regard. Some years ago, people were upset when one of the founders of the brokering industry disappeared without trace in what seemed to be a breach of trust. If the job is done well, however, it can play an important role. While I am conscious that we cannot incur extra cost on the Exchequer by extending the size of the board, there should be an insurance broker on the board. Given the quality of the industry representatives we have met, it would be a great asset to the Pensions Board.
I have some sympathy with that position but I am constantly being criticised that there are far too many pension industry interests on the board. I received an earful from certain Members of the Seanad in that respect. The Irish Association of Pension Funds is represented, as is the Irish Insurance Federation which is aware of the views of brokers. There are also pension lawyers, accountants and actuaries whose knowledge of the insurance sector is very helpful to the board. I am reluctant, therefore, to add yet another representative. I am not saying that the Irish Insurance Federation represents brokers but it has the general view of the insurance industry. I have been, and am, reluctant to extend the board in respect of the industry's interests. If I had my way I would be more inclined to make the board more representative of consumers' and pensioners' interests. At the same time I recognise that it is a specialist board and one needs specialist opinions on it.
The Minister would accept that many of the observations that have been made by PIBA and other organisations have been helpful to the Bill in trying to streamline the legislation and make it more effective. We are all thick-skinned about these things. The brokers are a distinct group involved in selling these products and their voice should be represented on the board. They would bring something to the board over and above what is involved in the larger insurance companies. The Minister should consider this matter between now and Report Stage.
How does the Minister think the sale of PRSAs will develop? Does he think there will be consolidation? I note the merger that has occurred between Irish Permanent, the TSB and Irish Life which is the controlling company under Mr. David Went. Branches of the TSB are oriented towards direct sales. The company seems to be initiating a policy where sales of insurance products directly to banking or building society customers will take place. Does the Minister expect that things will happen in that way? That appears to be what happened in the United Kingdom where the brokering industry was bypassed.
I would not think so. I do not think we are doing anything in this Bill that would assist that. At the same time, we are trying to create an open market whereby as many providers and others selling the product will be there. There is nothing in the Bill that brokers need to fear. In putting a brokers' representative on the board I could come under pressure to put other industry interests on the board. I have been criticised, as has the board, because it is regarded as being top heavy with people. While I might say it is useful to have a pension lawyer on the board, the accusation has been made that they are there for a reason, to look after their interests. Similarly, as regards actuaries, it is said that there is a quid pro quo for their advice on the board.
I suppose everyone who goes on the board would have a particular perspective, and equally so if the brokers went on it. First and foremost, they would look after the interests of their members. I would rather see more people representing consumers and pensioners on boards such as this. Obviously, there has to be a balance. Five pension industry people out of 17 is significant when one takes into account that there are four social partner representatives, two Department representatives and three ministerial nominees. However, there will now be five ministerial nominees, two of whom will have to be consumer and pensioner representatives.
I will withdraw my amendment and come back to it on Report Stage.
Amendments Nos. 95 and 96 are alternatives to amendment No. 94, so if amendment No. 94 is agreed to, amendments Nos. 95 and 96 cannot be moved.
Amendment agreed to.
Amendments Nos. 95 and 96 not moved.
I move amendment No. 97:
In page 109, between lines 14 and 15, to insert the following:
"(7B) The member of the Board representing the Insurance Broking profession shall be a person nominated for appointment thereto by such organisation or organisations as the Minister considers to be representative of the insurance broking profession.'.".
I will withdraw the amendment and come back to it on Report Stage.
Amendment, by leave, withdrawn.
I move amendment No. 98:
In page 109, between lines 14 and 15, to insert the following subsection:
"(2) The Minister shall take such steps as are necessary to ensure that of the members of the Board determined by the First Schedule to the Principal Act, as amended by this section, at least two shall represent consumer interests, one shall represent a national pensioner's representative body and one shall represent the insurance banking industry.".
I will withdraw the amendment for the moment.
Amendment, by leave, withdrawn
Section 50, as amended, agreed to.
Sections 51 to 59, inclusive, agreed to.
NEW SECTION.
I move amendment No. 99:
In page 117, after line 39, to insert the following new section:
"60.-(1) For the purposes of persons who obtain short-term employment contracts within the public sector, nothing shall prevent such persons from continuing to make contributions to the pension scheme or pension plan that they contributed to prior to the taking up of employment within the public sector.
(2) In this section 'short-term employment contracts' has the meaning of a contract in any part of the public sector for not more than 5 years.".
This issue has been brought to my attention. Under existing legislation, an individual can only be a member of one pension scheme at a time. The public sector requires compulsory participation in its pension scheme for all employees. Traditionally, employment in the public sector was a life-long arrangement. Even when public sector employees took secondment arrangements to other State sponsored agencies, arrangements were put in place to maintain their pension contribution at their original employment level.
In recent years, as a result of SMI and other measures to "professionalise" certain Civil Service functions traditionally carried out by general civil servants trained for certain jobs, professional candidates have been more frequently recruited externally specifically for certain jobs over a certain timeframe. Generally, these contracts are between three and five years. However, regardless of the potential recruit's previous employment and pension arrangements, as I understand it, the State requires compulsory participation in the State pension scheme.
In real terms, this means that a potential employee with ten years' experience in the private sector and a personal pension plan applying for a three year contract in a public sector agency is at a relative disadvantage. A public sector employee applying for the same job would be employed on secondment with his or her previous pension arrangements maintained by the new employer. However, the private sector employee would be required to suspend his or her personal pension plan and to compulsorily participate in the State scheme even though his or her contract arrangements make him or her an unestablished civil servant with no security of tenure longer than the duration of the contract.
Where there is movement from the public sector to the private sector, it is viewed among some at least that there is discrimination in the practice of how the pension arrangements are put in place. More flexibility in the labour market means that it is possible for people to move between private sector and public sector jobs. Employees who cross between the public sector and the private sector during their careers are in danger of ending up under-pensioned and, as a result, suspending their personal pension plan once or more often. The net point behind this amendment is that people who join the Civil Service for a period of three to five years must, as was suggested to me, automatically participate in the State pension scheme.
We can check it but I would have thought that would have been part of the contract under which they take up employment with the State. I would not have thought they would have been absolutely obliged to participate.
Would they be able to transfer their former pension plan to the Department or agency in which they are working?
I do not know if they can do that. I would have thought that would be suspended. We will have a look at that. If one moves from the Civil Service to the private sector, one cannot do that because one would have to resign from the Civil Service.
There is a new unestablished category of civil servant, that is, people who come into the service for a number of years. It was brought to my attention some months ago that a person had moved into the Civil Service and had this difficulty in terms of pension cover.
Perhaps the Deputy will give us the details. We will look at it now that the Deputy has raised the point.
It could be an issue after the general election. There will be many new——
Programme managers.
Advisers.
Not them again. We got rid of those.
The Minister had a good few.
We did not.
There was an army of them.
No.
They are all in the private sector now making millions of euro.
No. There was a room on my corridor which used to be full of computers, faxes and so on, but we got rid of that because that was the cabal. There is only one.
All the Minister's advisers are in the private sector now making millions.
No, they are not.
Yes, they are.
No, not in the Minister's Department but in other Departments. He does not have consultants at the moment.
There is an army of them.
This is numero uno here.
I knew that was at the heart of it.
If I ever lose my seat, I will get a job in public relations.
The more dodgy part of public relations, I suspect.
No, I would get my point across to the people.
Amendment, by leave, withdrawn.
Title agreed to.
Bill reported with amendments.
I would like to signal that on Report Stage, I intend to bring forward a small number of technical amendments to deal with custodian arrangements, society of actuary guidelines and the access to PRSA contributors to the ombudsman. As we are still receiving technical views on the Bill, some clarification amendments may be required. If so, I will bring these forward on Report Stage. In addition, specific issues were raised by Deputies today and I have undertaken to review these.
When are we due to take Report Stage?
On Wednesday morning.
Does the Minister know how much time we will have?
No.
When will we get those amendments?
They are relatively small. We will have them for the Deputy as soon as we can.
I am told that transcripts will not be available until Monday.
Will they be on the website on Monday?
I hope so. I thank the Minister and his officials, the people from the Revenue Commissioners and the Pensions Board, Mr. Long from the Irish Insurance Federation and the members, particularly the two spokespersons, for efficiently getting through all the work.
I thank everyone concerned, including my officials and the Deputies opposite.
I would like to be included in those thanks.
I would like to be associated with those comments as well.