Joan Burton (Dublin West, Labour) | Oireachtas source

Deputy Daly is saying she wants a deterrent. The problem is whether the deterrent will incentivise companies to close their pension schemes. Deputy Daly must be conscious of that. She referred to a couple of State bodies, but they are less likely to wind up. Incidentally, with regard to the ESB, I made it clear from the start that in respect of pensions legislation and the Pensions Board, the ESB scheme is a defined benefit scheme. The issue people had was, "What if the scheme closed tomorrow?". Well, what if Ireland closes down tomorrow? Clearly, in a catastrophic situation where all of the risks and liabilities crystalise tomorrow, there are lots of promises with regard to many things, and not just pension schemes, which would not be able to be filled. However, we were very clear that the ESB scheme is a defined benefit scheme.

The Deputy spoke about it being part of the contract of employment and that employers entered it voluntarily. It is important that she recognises that employers entered it voluntarily. There are many employers who have never set up a pension scheme. There are good employers, as it were, who did make those promises as part of the contract, but they encountered the problem of people living much longer and taking from the pension scheme. Obviously, the contributions they made during their lifetime of working reflected what was considered appropriate at a much earlier point, in terms of funding the scheme for the longevity required. Second, and this is a major issue across the world, the schemes' returns have been extremely disappointing. However, for the last two years the ESB's returns have been extremely impressive and hopefully that will continue and the deficiency in the scheme, as is expected by the Pensions Board, will be addressed via the agreement the scheme made with the Pensions Board.

On balance, I believe it is imprudent to seek to impose a direct employer liability in Irish law. I appreciate the sentiments that are being expressed, but there must be proper regulation so that schemes invest in ways that provide returns which are sufficient to meet the promises that have been made. That is the critical thing to do. However, we will keep this under constant review as well as looking at the situation of people in DC schemes, many of which operate on their own in a context where it is very difficult in a small fund to call the market for 30 years hence into retirement. In fact, one would have to be a very lucky investor, as Deputy O'Dea will know.