Aengus Ó Snodaigh (Dublin South Central, Sinn Fein) | Oireachtas source

I move amendment No. 2:

In page 9, between lines 19 and 20, to insert the following:
“9. The Principal Act is amended by inserting a new section 48A as follows:“48A.(1) A healthy sponsor shall not be allowed to close a defined benefit pension scheme except where the scheme has reached a minimum 90 per cent funding standard.
(2) For the purposes of this section a healthy sponsor means an employer that—

(a) has positive net revenues, or
(b) has a parent company with positive net revenues.”.”.

The purpose of these amendments is to ensure a healthy sponsor, namely, the employer or the company, cannot close a defined benefit, DB, pension scheme. The reason for that is because the OECD report on the Irish pension system highlighted an anomaly in Ireland. It stated:

Another weakness of Irish legislation is that it allows healthy sponsors to 'walk away' from DB pension plans, shutting them down, without creating a high-priority debt on the employer, as is the case in the United Kingdom. Under the UK's "debt upon employer obligation", the sponsor's debt (if the plan is underfunded) is determined by valuing the benefits on the basis that they are bought out in the full via immediate annuities (for pensioners) or deferred annuities (for non-pensioners).

There has been much debate outside this House on this issue, which appears to be becoming a trend. Those of us in Ireland may be more exposed than others in that regard because while we have many large employers, they often become subsidiaries of an even bigger conglomerate. Those conglomerates are quite healthy in the scale of things but their Irish subsidiary might not be as healthy or is, in their view, likely to become insolvent if the minimum funding standard for the pension fund is imposed in a case where it becomes insolvent. There must be some liability on that employer or its parent company. I am trying to ensure that in respect of the remaining the DB schemes in Ireland, which are down from 2,500 some years ago to 800, and that figure is likely to reduce further as many of those 800 schemes have been closed to new membership for a long time, the employer has the liability. It must be remembered that the DB scheme is based on an employee, on taking up employment with a company, being promised in a contract that they will enjoy the benefits of a DB scheme.

The companies now want to evade that responsibility because they did not take the required actions over the years to set aside the requisite sum of money to ensure the pension pot was in place not only to pay the pensioners but also to have regard to existing workers and those described as deferred members, who have left to move to other employment or for health reasons and who are also awaiting their payments. All of those people are stakeholders. They have an expectation based on an employment contract between them and the company and now, because of changing circumstances, the companies say they are not liable. We should try to ensure that our legislation reflects our priority - that companies have a duty to their employees and pensioners. This is one mechanism we could use to do that.