Mr. David Begg:

Addressing Deputy Ó Snodaigh's questions on the policy role of the authority, it can advise the Minister at the Minister's request but can also, on its own initiative, proffer advice to the Minister. The Minister has a separate source of advice in the form of the Pensions Council, which is a separate body from the authority but on which the authority is represented. As for the process by which that would happen, it seems that it would be the collective view of the authority meeting to discuss a particular issue, out of which would come either a response to the Minister or, alternatively, something that the authority felt should be brought to the Minister's attention.

On the second question of sustainability, the element of risk and uncertainty, as Deputy Ó Snodaigh quite rightly said, is very difficult to manage. What might risk be? Risk is that the demographic profile would be worse than we think it is. Uncertainty would be that we do not know what the level of GNP will be in a few years time.

There is a necessity to try to balance this. Perverse things can happen. I referred in my evidence after the dotcom bubble in 2002 to how very interesting things happened at that time. There was a collapse in the value of equities, which had a major impact on pension schemes, but the economy did not cease to grow. One makes choices then as to whether one thinks that privately provided pensions are the best option or risk can be better handled in some extension of the State scheme. These are very difficult and important questions and the committee is quite right to identify them.

The question of deferred pensioners also arose in Deputy Daly's remarks. Let me say first, in response to Deputy Daly, that I took enormous exception to her contribution in the House last week. I thought it was vitriolic, unfair and cowardly in the sense that she used the privilege of the House to say things about me that were unreasonable and unfair, in my opinion. She is quite right about the time being limited in how to deal with some of these problems; that is the only issue on which I can agree with the Deputy.

We can discuss my expertise in all this, starting with the Irish Airlines Superannuation Scheme, IASS, and what I did in those circumstances. That particular scheme was enormously complex, involving a number of employers and trade unions. We had a €720 million deficit in the fund, which was critical. That arose because the strain costs on the fund had not been responded to properly in previous years. There was a large number of restructuring processes in that industry, and the strain costs resulting in the pension scheme had not been responded to. The other problem was there was no agreement on whether the scheme was a defined contribution or defined benefit scheme. That decision would ultimately only be settled in a court of law, if tested, so nobody knew what it was. From the point of view of the board of the company, the formal position was it had no obligation whatever to staff.

The Deputy pointed out that I was a member of the board and general secretary of congress as well. I will park that for a moment before coming back to it. With regard to contacts held with deferred pension personnel, I accept and have made the point that there is a real difficulty as organisations outside the formal structure of the Labour Court are in quite a difficult position because they cannot have effective representation. It is not true that we did not engage with them. I appointed the industrial relations officer of congress, Mr. Liam Berney, to have regular contact with those groups of people. I made strong representations on their issues to the board in the course of the discussions that took place.

I will address the question of legitimate expectations. It is certainly true that employees took an enormous hit but there was one difficulty with that scheme. In certain circumstances it was a co-ordinated scheme but in other circumstances, it was unco-ordinated. If a person served in the scheme until 65 and left on a normal retirement date, the person would have a co-ordinated pension. That meant the person would have an occupational pension less the amount of the social welfare pension. That is the norm in nearly all of the defined benefit schemes around the country. If a person left prior to a normal retirement date - even within one week of turning 65 - there was an anomaly in the scheme that allowed an unco-ordinated pension. If a person had 40 years of service, the person would get 40 eightieths as the pension entitlement plus the old-age pension. That was an extremely beneficial provision but it was unsustainable because it was an anomaly in the circumstances of the pension fund being in deficit to the tune of €720 million.

I worked very hard on the board and as the congress general secretary to try to improve that. I was working at an enormous disadvantage as I could not say what I was doing at the board because I was constrained by confidentiality issues. As most people recall, the major shareholder on the board was totally and utterly opposed to any input of money to fix the scheme's difficulties. In the end, we tried to bring about a targeted benefit scheme that allowed people to have the same expectation as they would have had if they were part of a co-ordinated pension scheme. In the end, the workers of the company voted by a substantial majority to accept that. Of course, the deferred benefit people were at a disadvantage because of not having collective representation so they did not have a direct influence. They did not have access to the Labour Court to argue around any of the decisions emerging from the court relating to all this. I made a strong case to the board of the company for an injection of €40 million and it was eventually secured.

I will speak a little about my role in the Central Bank. I agree with the Chairman in that it has nothing to do with the Pensions Authority and has been brought in extraneously as part of the vilification process that has been ongoing. Nevertheless, I will deal with it directly. I have received no communication from the banking inquiry team regarding my comments on the draft of the report. Clearly, there is nothing in this that bears upon me from the team's perspective. I gave three and a half hours of evidence and made two written submissions, which are available to anybody who will take the trouble to look for them. That is very detailed evidence. In the course of giving evidence, I made a point that was fully vindicated by saying that in 2005, I pointed out to the board of the bank that there was a serious difficulty in circumstances where people felt they needed to get on a ladder of having a second house. Such second houses were being built by people who came here as migrants to work in the construction industry and would, effectively, have become the tenants for those houses. It would not have taken a genius to figure out that this was an unsustainable circular process.

My comments on this to the board were vindicated by no less a person than the chief economist of the bank in his evidence to the inquiry, such that the inquiry team wrote to me before I gave my evidence to ask if I wished to comment on what the chief economist stated. Not alone did I do it in the Central Bank forum but I also did it publicly at a social policy conference in UCD on 10 October 2005. I gave a copy of my speech to the inquiry and if anybody on this committee wants to find out what is in that, I am sure it can be provided by the inquiry team. It will probably be published as part of the evidence, as I assume all the evidence will be published. I reject completely that there is any connection between my suitability for this proposed role and my appointment to that position in the Central Bank.

I was asked about trustee information. One of the big problems with trusteeship at the moment, as I stated earlier, is that we have 150,000 schemes, which is an enormous amount. That means there is an enormous number of trustees. We should be honest. In many cases, people do not have the necessary investment experience or training to handle responsibilities of this type. It is a serious difficulty. There is a role for professional trustees, of course, who are people from the pensions industry usually commissioned to act on trustee boards. There is a strong case for reform to try to reduce the number of schemes. We will not really have the chance to ensure good investment decisions for people unless we can do that and professionalise the role of trustees. None of that is to gainsay the contribution that trustees make, almost always in a voluntary capacity, to pension schemes. There is a tremendous risk in this area and there should be full transparency. I would support such an initiative with respect to trustee reports. I would have no difficulty with that.