Mr. Tim Duggan:

That approach is very unlikely to be helpful right now because a fund would have to be built up. There are different ways it could be done. The fund in the United Kingdom to which the Deputy referred is essentially a quasi-insurance fund which is built up over many years from charges imposed on pension schemes. In many cases, when a charge is imposed on a pension scheme, it either impacts on the employer who is sponsoring the defined benefit pension scheme, in other words, the employer carries the can and pays more into the fund, or it is essentially a charge on the members of the scheme and results in reduced pension payments. It depends on the way in which the measure is applied. If one has a benign, reasonably solvent employer, he or she will usually pick up the tab.

The funds are amassed over many years and used in the event that an insolvent company is not able to fund its pension scheme. In the particular case the Senator raised, this would not apply and would not be of any use. As there has not been such a fund in Ireland, it would not have been of any use because the fund would not have been in place. Introducing one now to protect schemes in the future would have obvious advantages, but there would also be disadvantages. For instance, the big disadvantage is that it could result in some of the scenarios I outlined with regard to debt on employers and in exactly the same behaviours. It would impose additional charges on pension schemes already with funding difficulties or facing a predicament. For this reason, one would have to wonder how willing employers would be to continue funding these schemes if the costs were to increase continuously. It is also possible that in the event of a downturn in the economy or a large scheme failing, the fund would not be able to withstand the calls being made on it, unless it had been in place for a considerable period and, even then, it could experience difficulties. This concern persists in the United Kingdom, notwithstanding the fact that its fund has been in place for some time.

They do not expect that fund to be self-sustaining until after 2030, for instance. This is a long-term measure and given what is happening with defined benefit, DB, schemes worldwide one wonders if there would be a lifetime for such a fund in Ireland. In any event, such funds seem to work best in countries that have large scale. The UK is probably almost at the edges of the type of scale that is required. The view has been expressed, and it would appear to be intuitively correct, that Ireland may not have the scale to sustain a fund of this nature in terms of the schemes that are in place and the level of liabilities that accrue to those schemes.

In his engagement on the Bill in the Seanad on Tuesday, the Minister listed many reasons that debt on the employer requires careful consideration, some of which I have repeated.