Joan Burton (Dublin West, Labour) | Oireachtas source

I thank the Deputies for their contributions.

The Bill seeks to provide a floor of €12,000 for existing pensioners. If the pension fund is on its way, with the assistance of the Pensions Board, to sorting out its problems, existing pensioners, active and deferred members will not be affected once we get the scheme back towards solvency. That is an important point to make.

The funding standard was stood down in the month or two following the bank guarantee, I think, on the premise that, as happened in the case of the First World War, the bank guarantee would be no more and that everything would be sorted before Christmas. Not only did the bank guarantee result in the dreadful consequences of which we all are aware but the funding standard was suspended in a period during which pension schemes were facing enormous difficulties. One could kick the can down the road indefinitely and current, active and deferred members could hope for the best. This is the first time in Ireland that we have proposed legislation which seeks to recognise the issues for both active and deferred members and to rebalance in the event that - we do not want to see this happening - a pension fund becomes insolvent.

The good news, from the reinstatement of the funding standard and the work being done by the Pensions Board with pension schemes, is that 50% of pension schemes are now adequately funded and have arrangements in place with the pensions regulator and the board. When the funding standard was being reintroduced, the predictions were that almost every scheme might collapse. Happily, that has been shown not to be true. We are working with the other 50% to put viable arrangements in place for existing pensioners and also provide something, an issue raised by members, for active and deferred members who have also contributed to a scheme. A floor of €12,000 is provided for.

The reason the Mercer report was not published immediately was it was under discussion in terms of Government policy. As Deputy Willie O'Dea will appreciate, I was not in a position to publish it until after the deliberations on the Bill and the go-ahead on it was received. I published it immediately after the Bill was brought before the House.

Mercer highlighted that most pensions in payment in our model scheme were, as Deputy Clare Daly stated, at the lower end of the spectrum. That is why I have sought to provide a floor of €12,000. More than 50% of pensions, the median level, are €11,000. The reason the Bill is extremely progressive is that it seeks to protect the pensions of low-paid workers. In the Mercer report there was a focus on protecting a floor of €6,000, which I did not consider to be adequate. Many of those involved in the pensions sector argued for a much lower figure. We have achieved, through agreement, a much higher floor, particularly when taken together with the fact that those in private pension schemes have almost universally contributed through PRSI to a State retirement pension, giving them the possibility of bringing their total package up to €24,000. In the case of a pensioner with a State retirement pension with a dependent spouse, the figure is higher, which matter is stressed particularly by those involved in the Senior Citizens Parliament and the trade union movement. We have reached a package which is far better than that which was being suggested by many involved in the pensions sector when rebalancing-restructuring was first mooted.

The Bill does not affect a pensioner who has an annuity or somebody who is retiring on the limited State retirement pension only or who may have an entitlement on a means-tested basis to a non-contributory pension. It is important that we make that clear, particularly to pensioners and others who, when the word "pension" is mentioned, become nervous about their own position.

On the audience issue, the Bill marks the first time deferred members' issues have been addressed. That is a positive development and I thank Deputy Clare Daly for acknowledging it.

The trustees must notify in writing all members of a scheme, any other person in receipt of benefits under the scheme and any authorised trade union representing members of the scheme of the circumstances giving rise to the proposed application and the reasons they believe an application is in compliance with their fiduciary duties. Pension law in Ireland is complex because, in effect, it is governed by trust law. There are onerous requirements on trustees. The Pensions Acts require trustees when considering a restructuring of scheme benefits to first undertake a comprehensive review of the scheme with a view to its long-term stability and sustainability. At a minimum the review must cover the following matters: the benefits payable under the scheme; the options available for reductions in benefits and their impact on the different category of members and other persons; the contributions required, both in relation to future accruals of benefits and any past service deficit; the options for increasing contributions, should the need arise after a direction is made by the Pensions Board, and the employer's attitude to any request for increased contributions in such circumstances; the long-term investment strategy, including, where appropriate, how any transition from the current investment strategy should occur; and the future risks facing the scheme, including the possibility of the scheme proving more expensive than anticipated, whether through investment under-performance, improving longevity and life expectancy and any other cause, and the measures available to the trustees in these circumstances such as contribution increases or changes to discretionary benefits.

In the context of the Bill, the Department is working on guidelines which we anticipate being in a position to publish in January, but we cannot proceed to deal with them until the Bill has been passed. I will certainly give consideration to additional guidelines which members of the committee may consider would strengthen what is already in place in the context of the fiduciary duties of the trustees. For instance, in the Seanad there was a proposal to undertake an analysis of what had gone wrong to require a scheme's restructuring to note, for instance, what Deputy Clare Daly referred to, which had been a factor, about which we have been hearing again recently in the context of discussions on the health sector, namely, extra benefits being paid, extra years being added, etc.

I do not see that being incorporated in the principal legislation but I anticipate it would certainly be a matter for consideration in regard to the guidance and guidelines.

On the later amendments relating to an individual audience, as it were, I am not sure how that could be done in practice, given, as was said, that deferred members may be living all over the world. The trustees must notify them, advise them and have a very careful process where they, in turn, may have the possibility of coming together to make a collective representation, but it is difficult, if not impossible, to designate that as a requirement in law. Somebody from another country may have worked in a company for five or ten years and then returned to their own country and may not be necessarily all that interested, particularly if subsequently they went on to have further entitlements in the country in which they are now living. Those requirements have to be operable. Very valuable suggestions have been made, including during the debate in the Seanad, on the guidance and the guidelines, which we are endeavouring to take into account.