Dáil Éireann Debate, Tuesday - 19 June 2018
58. Deputy Paul Murphy asked the Minister for Employment Affairs and Social Protection if legislation to prevent employers from unilaterally downgrading their employees' pension schemes from defined benefit to defined contribution is planned; and if she will make a statement on the matter. [26608/18]
Amharc ar fhreagra74. Deputy Mick Barry asked the Minister for Employment Affairs and Social Protection if she will introduce legislation to ensure private companies cannot unilaterally downgrade their employees' pension schemes from defined benefit to defined contribution or close defined contribution schemes; and if she will make a statement on the matter. [26579/18]
Amharc ar fhreagraI propose to take Questions Nos. 58 and 74 together.
Almost all Irish defined benefit schemes have a rule that allows the employer to cease contributions, usually after a notice period. Currently there is no legislative obligation on the employer to make contributions and no further liability on the employer where contributions cease. Neither is there an obligation on the employer to give notice to members or to consult in advance of ceasing contributions.
In the case of defined benefit schemes, neither I nor the Pensions Authority has the power under legislation to intervene to compel an employer to continue to make contributions to a scheme. Even where a scheme is closed to new members or to future accrual of benefits, the sponsoring employer role continues in relation to that scheme.
The Roadmap for Pensions Reform, which was published in February of this year, details specific measures that will modernise our pension system. It sets out under Strand 4, ‘Measures to Support the Operation of Defined Benefit Schemes’, that the Government is committed to advancing the Social Welfare, Pensions and Civil Registration Bill 2017. The purpose of this Bill is to respond to the ongoing difficulties in DB schemes and to increase protections for members as well as encouraging employers to ensure that schemes are well funded and managed.
The General Scheme of the Bill, which was published in May 2017, contained a number of key measures relating to DB pension schemes. These proposed provisions will ensure that an employer cannot “walk away” at short notice from the pension scheme it is supporting by providing a 12 month notification period where an employer is seeking to cease making contributions to a scheme. The amendments seek a middle road between the current position where employers can abandon DB schemes and full and immediate debt on employer provisions. The measures will act to support existing provisions in the Pensions Act and will provide for further protection for scheme members’ benefits and enhance employer responsibilities for their schemes.
The amendments also provide for more frequent monitoring of the financial position of schemes and will further provide that, where a scheme is in deficit and a funding proposal has not been put in place in a timely manner, the Pensions Authority may direct steps to be taken to ensure that the scheme meets the funding standard.
It is important to note that if this new legislation is enacted, a sponsoring employer will have to give a minimum notice period of twelve months before contributions to a scheme can cease. However, it will not prevent a company from ceasing contributions once the minimum notice period is served provided the scheme meets the Minimum Funding Standard.
These provisions are quite technical and complex. Work to finalise them is at an advanced stage and I hope to be in position to bring forward the amendments at Committee Stage in the near future.
I hope this clarifies the matter for the Deputies.
