Oireachtas Joint and Select Committees

Thursday, 12 December 2013

Committee on Education and Social Protection: Select Sub-Committee on Social Protection

Social Welfare and Pensions (No. 2) Bill 2013: Committee Stage

11:40 am

Photo of Willie O'DeaWillie O'Dea (Limerick City, Fianna Fail) | Oireachtas source

I move amendment No. 16:


In page 12, between lines 18 and 19, to insert the following:“(1AD) Any levy on pension schemes for insurance against insolvency shall not be applied to defined contribution pensions.”,”.
The new levy, that is the 0.015% levy is not ringfenced to deal with what it is proposed to deal with in the Bill, namely where there is a shortfall in a double insolvency.

Leaving that point to one side, where there is a shortfall

Leaving that aside, where shortfall arises in respect of a double insolvency, the pension insolvency being a defined benefit pension, the levy will be used to make up that shortfall. This has no connection with defined contribution pensions schemes, yet these schemes are being asked to pay part of that cost. For example, a situation could arise whereby there are two defined benefit pension schemes and one is wound up, in respect of which, if there are not sufficient assets to meet the 50% target, people will as a result of this legislation get their payments from the State, which I welcome, and the second of which, because it was not able to survive, was subsequently converted into a defined contribution scheme. I do not see the reason the pensioners under a defined contribution scheme, who no longer have the benefit of a defined benefit pension scheme, which is a more valuable pension, should be paying part of their hard-earned savings to prop up the benefits which people received under a defined benefit scheme.

There are two different types of schemes. The levy being introduced under this legislation will ensure in the case of a double insolvency that people in a defined benefit pension scheme which is wound up will receive a minimum of 50%. Why should people who are in defined contribution schemes, which are a different type of scheme, pay for the people in the defined benefit schemes who are, by definition, in a generous type of scheme?

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