Joan Burton (Dublin West, Labour) | Oireachtas source

Only about 6% of schemes have been restructured to date and the majority of that restructuring has related to post-retirement increases. Very few schemes have adjusted core benefits. In some schemes, for instance, the pensions, including deferred ones, moved with how salaries moved in the company. In a lot of restructuring cases, the sacrifice that has been made is to forgo some or all of those increases. Those kind of changes would apply to deferred members because, in a certain sense, they are all pensioners of the company. When deferred members come to get the pension, they will get it in the context of the restructured scheme.

It does not happen to them at the moment because they are simply deferred. What they may expect, however, will have changed because the pension entitlement, when a person becomes a pensioner, will have changed. That is quite a popular way, just as workers negotiating a wage increase have decided that a percentage or all of the wage increase might well be devoted to plugging a deficiency in the scheme as a priority, or it might be shared 50:50. These are the common stratagems that have been identified in restructuring.

Active and deferred pensioners are treated the same, therefore, but the deferred people have not yet reached retirement age or their retirement entitlement for the purposes of the pension fund.

As regards Deputy Shortall's comments, we had a detailed discussion on the earlier amendments concerning employer liability. I said then that in drawing up the legislation, detailed consideration had been given to the arguments for and against employer liability. On balance, the decision has been not to go with employer liability for a number of reasons. One is that, in terms of unintended consequences, it may precipitate the closure of a number of schemes.

We discussed the example of a long-standing Irish company which, perhaps, was taken over by an international parent company. It may well be that while the Irish company had on a number of occasions put extra money into the pension fund the international parent was not inclined to do so. The fear, based on advice from different quarters, was that this could precipitate the closure of a number of funds which were otherwise viable.

Another legal point in terms of pension schemes is that under Irish law employers' commitments to pension schemes are voluntary. Employers do not have to put their employees into a pension scheme. I hope that as we leave the bailout and head to a more prosperous future for everybody we will be in a position, as other countries have been, to put in place either a mandatory or auto-enrolment based supplementary pension structure. Currently, employers in Ireland can voluntarily set up a pension scheme. Where a scheme is not put in place, employees would be reliant exclusively on the State retirement pension. The difficulty is that in putting in place an employer liability we would be making things tougher for employers who had made provision for a pension scheme rather those employers who made no commitment to the provision of any type of pension scheme.

Having examined and discussed this at great length, we decided on balance not to include an employer liability. We have looked at what has happened in the UK. The UK is a much larger economy than Ireland and it is, therefore, possible to spread risk there in a more determined way than here. In the UK, extremely complex and, in a number of cases, effective mechanisms have been used by employers to avoid pension liabilities and any involvement in pensions. In a situation where we are trying to ensure that the maximum number of people have a pension provision, which situation has moved in recent decades towards defined contribution as opposed to defined benefit in that many defined benefit schemes are not open to new entrants, we have opted not to provide for employer liability.