Dáil Éireann Debate, Tuesday - 19 June 2018
35. Deputy John Brady asked the Minister for Employment Affairs and Social Protection the protections in place for the 1,200 defined benefit scheme members in a company (details supplied) whose scheme is to close on 30 June 2018; and if she will make a statement on the matter. [26671/18]
Amharc ar fhreagraOn 30 June, the defined benefit pension scheme of 1,200 Irish Life employees will close.
As we are all aware, all Irish defined benefit pension schemes have a rule that allows the employer to cease contributions, usually after a notice period. There is no legislative obligation on an employer to make contributions or any further liability on that employer where contributions cease, nor is there an obligation on an employer to give notice to members or to consult in advance of ceasing contributions. Accordingly, neither the Pensions Authority nor I have the power under legislation to intervene to compel an employer to continue to make contributions into a scheme.
Even when a scheme is closed to new members or to the future accrual of benefits, the sponsoring employer role continues in respect of that scheme. Where a defined benefit scheme is closed to future accrual of benefits, which is not the same as being wound up, the scheme remains subject under EU and Irish law to the funding standard requirements and to the Pensions Act in general. It must continue to satisfy minimum funding standards into the future. It is important to note that the closure of a defined benefit scheme to future accrual does not mean its members will not receive a pension in line with the benefits that they accrued before the date of closure.
While it is not appropriate for me to comment on individual pension schemes, I am aware of the announcement of the closure of the Irish Life pension scheme to future accrual. I understand that the scheme is financially secure and its assets adequately cover all liabilities that would arise in the event of the trustees taking the decision to wind up the scheme.
As the Deputy is aware, I am finalising work to introduce extra protections for members of defined benefit pension schemes. I hope to be in a position to table those necessary legislative amendments on Committee Stage at the earliest possible opportunity. I hope this clarifies the matter for the Deputy.
I thank the Minister. Unfortunately, this is another case of an employer reneging on its employees' pension scheme. It has been happening consistently in recent years. It is also a case of the Government reneging on its responsibilities, given that this issue has been widely debated, including in the Chamber and by Oireachtas committees. There is considerable frustration. Irish Life workers have been left high and dry by the Government. The Minister is aware that the company's scheme is €240 million in surplus. The lack of action by the Government has not only given a green light to Irish Life to close down its defined benefit pension scheme, but to many other businesses as well.
The Minister alluded to the Social Welfare, Pensions and Civil Registration Bill 2017, which we are still awaiting. She stated that the Government was aware of the concerns and issues but did not have the power to intervene, so where are the necessary protections?
I am loath to discuss a specific company or scheme, but the Deputy is aware that the scheme in question is not being wound down. Rather, it is being closed to future entrants. The surplus within the scheme is sufficient should the trustees decide to make changes. As such, there is no immediate threat or risk to the scheme's current members.
While an obligation preventing employers from closing defined benefit schemes in certain circumstances may appear to provide stability and certainty for members, it might also achieve a less desirable outcome, for example, prompting well-funded schemes to wind up in order to avoid legislation, which is not something that we want to see. It could give a competitive advantage to employers that never provided a risk-free defined benefit pension scheme. It could impact on a company's creditors, including debts owed to other businesses and individuals. It could impact on the value of a company's shares, many of which might be held by other pension funds, credit unions or small-scale investors. As such, we need to be careful in the first instance about what we say about a particular company and, second, about our views on previous legislation, which was passed by a Fianna Fáil Government, and current Government legislation that is before the Houses.
The key issue is the shifting of pension risk from the employer to the employee. The Government seems to be deliberately dragging its heels in putting protections in place. The Bill passed Second Stage eight months ago and the committee has been screaming for it, but we are yet to see it. In my view and that of the people who are being impacted by this issue, there is a deliberate delaying of the necessary legislation by the Government.
Things will be very grim come 30 June for the 1,200 employees of Irish Life. The Government is standing idly by and doing nothing. It has completely ignored the Organisation for Economic Co-operation and Development, OECD, review of Ireland's pension system and recommendations on defined benefit schemes. I ask the Minister to comment on that. Does she believe protections should be in place for employees in defined pension schemes whose employers have taken from the Government's dragging of its heels that they have a green light to close down these schemes?
The previous Government introduced increased protections for deferred members of defined benefit, DB, schemes that were wound up. The wind-up priority order was amended in the Social Welfare and Pensions (No. 2) Act 2013. Prior to those changes, pensioner benefits were given priority over the benefits of active and deferred member schemes. The changes to the wind-up priority order deprioritised a portion of pensioner benefits in the manner in which the resources of a scheme are distributed on the wind-up of a pension scheme. Those changes made more resources available to current workers in defined benefits schemes. The Social Welfare and Pensions Act 2012 required that a DB scheme hold additional funding in the form of a risk reserve by 2023. We have already made significant changes to how defined benefit schemes are managed. The Deputy is well aware that we have current legislation that has passed Second Stage.
Where is it?
It is being amended.
Where is it?
The Deputy knows where it is.
It has been eight months since Second Stage.
The Minister without interruption.
Some legislation takes eight years to go through this House. The Bill is a priority for me.
The Minister has given the green light to-----
The Minister without interruption.
The Deputy asked me a question and it would be nice if he let me answer it. There is a reason we take turns speaking during questions. He should allow me to speak. A few amendments to the Bill need to be finalised with the Attorney General to enable me to introduce them on Committee Stage. We hoped to take Committee Stage before the end of May but I am not ready to do so, for which I apologise. I hope to be ready before the House rises in July. We all want this Bill. There is not a competition of merit here. Deputy Brady and I want the same thing and there is no need to be adversarial about it. We want to introduce legislation that protects both workers-----
In what way is priority being given to protecting the employees concerned?
Sin é, we are moving on.
-----and the companies that pay into these defined benefit schemes to ensure everybody wins.
