Willie O'Dea (Limerick City, Fianna Fail)
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The problems facing the pension system in this country are manyfold. Unfortunately I will only have time in the two minutes available to me to focus on one of these problems. I suspect the reason the Minister for Social Protection is not here is that less than one month ago we told her in unmistakable terms that the 30 June deadline for the trustees of defined benefit pension schemes to submit funding proposals would not be met by most of those trustees. That has turned out to be the case. They have not submitted their proposals by the 30 June deadline because they know they have no hope of meeting the onerous funding requirements set out for them. The result is that many of them will wind up in a situation where the assets are distributed in a most unfair and patently unjust manner. When these schemes wind up, those who have already retired will get the full benefits to which they are entitled regardless of how much it will cost - it is costing a lot more now than previously - and the balance will have to be distributed among the remaining scheme members. A person who has retired, such as a chief executive with an index-linked pension of €100,000 per annum, will have his or her pension fully protected, whereas somebody who has worked for 30 years and is a few weeks or months short of retirement may get nothing.

This is not simply an academic exercise. I am currently dealing with three deferred pensioners with the TSB in Limerick, all of whom are in their late 50s. They should be entitled to pensions ranging between €22,000 and €25,000 per annum but, as a result of the wind-up of their scheme and the fact that those who are already retired have to be fully compensated, they have been told they will get amounts ranging between €4,000 and €5,000 per annum. That is a blatant injustice.

The Minister promised on a number of occasions to change the order of priority. She has allowed the 30 June deadline to elapse in full knowledge that the schemes will wind up and their assets will be distributed in this unfair manner. She made commitments in the programme for Government and the legislative programme, as well as to organisations such as ICTU and IBEC, but her indecision appears to be final. What is the reason for this paralysis? Is she going to do something, even at this late stage, to alleviate the problem these people face?

Clare Daly (Dublin North, Socialist Party)
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The cat is clearly out of the bag and we are now dealing with an open crisis. As Deputy O'Dea noted, however, it is not unexpected because we knew this day would come. Some 400 of these schemes have already closed over the past five years and 300 out of the 900 existing schemes have failed to meet existing standards. What this means in reality is that the reasonable expectation of tens of thousands of workers to a certain standard of living on retirement has been ripped from underneath them. What is the Government going to do about this? The delayed reaction in changing the order means that when these schemes wind up the pensioners will get everything and those still at work or making deferred contributions will get nothing.

Furthermore, many pension schemes are using the current crisis to get out of existing commitments. Examples of such schemes are the ESB and Aer Lingus. The ESB's pre-tax profits increased fourfold last year to more than €300 million. Its chief executive earns in the region of €400,000 and his predecessor earned approximately €700,000. Despite stating it cannot honour the commitments given in the ESB pension fund, it paid out a dividend. Similarly, Aer Lingus is going through a huge crisis involving thousands of workers.

There was a 40% increase in operating profit this year, with record numbers of passengers being carried, yet Aer Lingus says it cannot contribute to the pension scheme. This is not good enough. Some of these schemes are in trouble because of inappropriate regulation - which successive governments have stood over - as well as asset stripping by some of the companies and flawed accounting practices. What we want to know is what is the Government going to do to protect the livelihoods of these tens of thousands of pensioners.

Alan Shatter (Dublin South, Fine Gael)
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First, I wish to inform Deputy O'Dea that I understand the Minister for Social Protection had another commitment from well before this matter was submitted and that is the only reason she is not here and I am. In so far as I do not answer some of the issues raised, I will ensure that she is aware of the issues the Deputy has raised.

I thank both Deputies for raising what is an important issue for many people. The persistent funding difficulties of defined benefit schemes, due to increasing life expectancy and the financial downturn, have been well recognised. Employers, unions and trustees have been making strenuous efforts to protect the viability of their schemes and many measures have been introduced to support these efforts. The funding standard for defined benefit schemes was suspended in 2008, following the downturn in the financial market, to give the trustees and sponsoring employers adequate time to assess their schemes and consider a response to improve the funding position. The reintroduction of the funding standard was then delayed on a number of occasions pending changes to legislation which were designed to help trustees respond to these challenges.

Following the reintroduction of the funding standard in June 2012, pension schemes were required to submit funding proposals to the Pensions Board by 30 June 2013. Where funding proposals have not been submitted, the Pensions Board is formally contacting schemes to ascertain their particular circumstances. The Pensions Board will then decide what steps to take on a scheme-by-scheme basis and taking account of the individual scheme circumstances. However, it must be emphasised that trustees must meet their legal obligations and ultimately the Pensions Board will use its regulatory powers where benefit underfunding is not properly addressed.

In trying to strike a balance between the need to support schemes in their efforts to meet funding challenges while simultaneously implementing a regulatory framework to ensure pensions commitments made can be met, the following measures were introduced to ease pressures on defined benefit schemes while the funding standard was in abeyance: significant legislative changes were made in the Social Welfare and Pensions Act in 2009 to allow for the restructuring of underfunded schemes by removing the priority given to post-retirement increases for pensioners to ensure a more equitable distribution of assets in the event of the wind-up of a defined benefit scheme; the powers of the Pensions Board were strengthened to ensure that pension contributions are remitted by employers to scheme trustees; the pensions insolvency payments scheme was established to reduce the cost of purchasing pensions for trustees where the employer has become insolvent; and legislation was introduced in 2010 and 2011 to provide the option of a sovereign annuity for trustees.

Changes to the defined benefit model and the funding standard, including the introduction of a risk reserve, were made in the Social Welfare and Pensions Act 2012. The reintroduction of the funding standard followed. More recently, the Minister for Social Protection announced a number of regulatory changes to assist defined benefit schemes as they prepared funding proposals. Legislation has since been enacted in the Social Welfare and Pensions Act 2013 to strengthen the powers of the Pensions Board.

The funding standard provides a benchmark against which the "health" of a scheme can be tested. The responsibility rests with the employer and the trustees for ensuring that the scheme is properly funded and managed. While the recent OECD review of the Irish pension system describes the funding standard as ''undemanding'', many schemes are coming from a deficit position and it is clear this is a difficult problem that requires careful management. Ultimately, it must be remembered that the regulatory structure is there to ensure members' benefits are protected. Therefore, it is expected that all defined benefit schemes will submit their proposals to the Pensions Board. Compliance with the regulatory structure is essential for the future sustainability of these schemes and increased security of members' benefits. It will also ensure that we ascertain the precise funding position of schemes.

Following receipt of proposals, it will be possible to get a more accurate indication of the level of underfunding in defined benefit pension schemes. This will also allow for the impact of the many measures already introduced by Government to be assessed, including the potential benefits to schemes of the use of sovereign annuities or bonds. The Minister, Deputy Burton, is keeping the situation under review and will report back to the Government in the coming months on these issues. A wider package of legislative proposals and additional reforms will be considered at that stage.

Willie O'Dea (Limerick City, Fianna Fail)
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The Minister's response, which is obviously a script from the Department of Social Protection, is not unfamiliar because we have heard it here several times previously. I could quote it by heart. It will give no comfort whatsoever to people who will be affected by this. Everybody knows, including the Minister and her colleagues, that a number of defined benefit pension schemes will close down. The longer the situation is left as it is, the more of them will close down, and the more of them that close down, the more current or active employees will be affected. Their pensions will be determined in a way that is manifestly unfair.

I put it to the Minister that the programme for Government states that the priority system will be changed. It is also on the legislative programme for this session that the current rules for the distribution of assets and the wind-up of defined benefit pension schemes will be changed. This has been promised by the Minister on no less than three occasions. However, we are now told that the Minister is reviewing the situation and thinking about it. We are told she is considering the options and looking at this and that. In the meantime, with every week that passes another defined benefit pension scheme closes down and employees are left at a disadvantage. Is the Government going to do anything to alleviate this injustice before it affects further thousands of employees who are just unlucky because they have not reached retirement age by the time their schemes are wound down?

Clare Daly (Dublin North, Socialist Party)
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The Minister's response is totally unacceptable. The statement that the crisis in defined benefit schemes is because of increased life expectancy and a downturn in the financial market is not true. He has failed to address the points I raised regarding very profitable companies that are using the current situation as an excuse to avoid their responsibility. Defined benefit schemes are not unaffordable nor unreasonable. We are talking about relatively modest pension schemes under which people had a certain expectation as to what they would get on their retirement. They contributed heavily out of their pockets and their employer sometimes contributed as well for them. Therefore, they have paid for their pensions. Unless the Government acts, these people will get nothing. People currently in work, some of whom have worked for up to 40 years, are being told by Deputies and Ministers, who can get quite a gilt-edged pension after 20 years, that the Government is going to do nothing for them. This is not good enough. Already, we have seen this happen at TSB and the Abbey Theatre, and now AIB is indicating it will close its defined benefit pension scheme. Some 300 other schemes are on the edge. What is the Government going to do to deal with this situation? It is unacceptable. In reality, pensions are deferred wages that have been earned by workers. They should not be gambled with and left open in this way. The Government has a responsibility to address the problem sooner rather than later.

Alan Shatter (Dublin South, Fine Gael)
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I tried not to choke when I heard Deputy O'Dea tell me that the people affected by this are simply unlucky. Deputy, they are the casualties of the complete mess your party made of this country over 14 years.

Willie O'Dea (Limerick City, Fianna Fail)
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They are unlucky not to be retired already. The Minister knows what I meant. He should address the subject

Alan Shatter (Dublin South, Fine Gael)
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They are the casualties of the Fianna Fáil Party's failure to put in place a regulatory regime that ensured defined benefit schemes were properly maintained.

Willie O'Dea (Limerick City, Fianna Fail)
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The Government has been promising to address it for two and a half years. When is it going to do something?

Alan Shatter (Dublin South, Fine Gael)
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I did not interrupt the Deputy, so perhaps he will let me conclude.

Willie O'Dea (Limerick City, Fianna Fail)
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Stick to the subject and answer the question. The Minister should not be here at all on this.

Alan Shatter (Dublin South, Fine Gael)
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Let us not suffer from amnesia as to who laid the foundations for the enormous difficulties confronting a large number of people throughout the country who are members of defined benefit schemes.

Willie O'Dea (Limerick City, Fianna Fail)
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The Minister suffered from amnesia about a certain incident when he insulted the Garda and would not take a breath test.

Alan Shatter (Dublin South, Fine Gael)
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The Deputy does not like it when reality comes back to hit him.

Willie O'Dea (Limerick City, Fianna Fail)
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I do not like it when I do not get an answer to a specific question.

Alan Shatter (Dublin South, Fine Gael)
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He is crying crocodile tears on behalf of individuals who have genuine concerns.

Willie O'Dea (Limerick City, Fianna Fail)
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I am concerned for people in Limerick and down the country on whose behalf I am asking these questions. Address their concerns.

Alan Shatter (Dublin South, Fine Gael)
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Those people would not be in the difficulties they are in if not for the incompetence of the Deputy and his colleagues in government.

Willie O'Dea (Limerick City, Fianna Fail)
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It does not matter, as I am not going to gain much by staying in the Chamber.

Willie O'Dea (Limerick City, Fianna Fail)
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It does not make any difference.

Alan Shatter (Dublin South, Fine Gael)
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I am afraid not all of us fall for the PR advice the Deputy has been given to forget the past and just engage in criticism. This is a very important issue. It is correct that it affects a number of people and there are obvious difficulties in this area. In total, 212 of the 933 defined benefit schemes currently subject to the funding standard were due to submit a funding proposal by 30 June and did not do so. A number have been in contact with the Pensions Board with a view to submitting proposals very shortly. Immediately after the 30 June deadline, the Pensions Board initiated contact with schemes that had not submitted plans to ascertain their particular circumstances.

I want to emphasise the importance of trustees arranging for an actuary to carry out a valuation of individual schemes' liabilities and assets at regular intervals. The effective date of actuarial valuations must be not later than three years after the previous effective date. If the actuary certifies that the scheme has insufficient assets to satisfy the funding standard, the trustees must ensure that a funding proposal is forwarded to the Pensions Board with the actuarial funding certificate. The funding proposal must be designed to ensure the scheme could reasonably be expected to satisfy the funding standard at the effective date of the next actuarial funding certificate. The trustees should instruct the actuary to bring forward proposals for the range of measures that could reasonably be expected to meet such requirements. These could include, first, an increase in the level of contributions to be paid by the employer and-or the scheme members, second, a reduction in the benefits which would be payable to each respective member, third, changes to the investment strategy in regard to the scheme's assets, or, fourth, a combination of any of the measures I have just set out. Specific guidelines under the Pension Acts must be followed if a reduction in the accrued benefits of members is proposed.

The Pensions Board has a specific statutory remit in this area. When it has followed up on these matters, it will be reporting to the Minister, the Minister will be reporting to Cabinet and Cabinet will consider what steps Government should take. However, to suggest the Government has done nothing so far is unfair to the Minister for Social Protection. It is also untrue, and I detailed some of the action taken in my initial comments. Let no one pretend this is an easy problem to resolve. Let us have a bit of honesty in this House. Deputy O'Dea and others in Fianna Fáil should stop washing their hands of their responsibility as individuals for the problems this Government is now seeking to address.

Willie O'Dea (Limerick City, Fianna Fail)
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Nothing is going to be done.