Mr. Fergal O'Brien:

I will begin with Deputy Brady. I thank him for his comments. His core question relates to what has been happening with defined benefit schemes, why they are in decline and what can be done to stop that. Deputy Collins also mentioned these issues in her contribution. The world has changed dramatically over the past ten or 15 years. A range of financial market issues have put unsustainable pressure on these schemes. The scale and type of financial commitments businesses are faced with are a multiple of what they would have planned for when they established the schemes. There have been significant changes in demographics and life expectancy. There is a mix of other reasons, including regulation, which has made it more difficult for employers to continue to support schemes. The dynamic and the facts have changed entirely. This is a global phenomenon; it is not only an Irish phenomenon. I mentioned the position in the UK and there are similar scenarios internationally.

It is also important to recognise that, from a public sector perspective at policy level, it has been recognised that final salary defined benefit schemes will not be affordable in the future. That change has been made. We no longer have a defined benefit final salary scheme for entrants into the public sector. Even at the level of the State, therefore, the unsustainability of final salary defined benefit schemes has been recognised and, unfortunately, they are in decline for a range of reasons. They have become unsustainable for the State and individual businesses. However, many employers want to sustain such schemes and we should do everything we can to support them and not to disadvantage them. The core of our concerns about the proposed legislation is that it is patently unfair to a particular subset of businesses that have voluntarily entered into a scheme commitment with employees to make that mandatory. They enter into the arrangement on that basis. This is very much a retrospective change to a small subset of employers that, working with their employees, are trying to provide the best retirement option and trying to navigate that in a complex and changing world in the management of liabilities of defined benefit schemes. Other employers have defined contribution schemes and they will not be affected, while many employers have no schemes at all, which is a much broader policy issue. However, for employers that have been trying to support their employees for their retirement in the best possible way, the State will retrospectively impose additional regulation, cost and significant risk into those businesses.

IBEC wants viable schemes whereby employers want to maintain them and work with their employees to do so. We want an environment that can support the schemes for as long as possible but we also have to recognise the obligation on us all to protect businesses and employees who are not scheme members, which is increasingly becoming the reality. The vast majority of defined benefit schemes are closed to new membership. I do not know what are the numbers but only a small number of schemes are open to new members. There is an obligation on these businesses to their deferred members, retired members, active members and non-scheme member employees, who also have to be taken into account. That all has to be seen in the round in the context of what have become unsustainable liabilities.

Deputy Brady asked whether we would support the Sinn Féin suggestion that the winding down of defined benefit schemes should be made illegal. We would not support that suggestion, even where companies are profitable. They could be profitable but there could be a detrimental impact on non-scheme member employees in terms of their future reward prospects and job creation. The company might survive but it would not be able to provide the same remuneration to non-scheme member employees and would it able to increase employment, expand and invest in the future of the business in a productive and competitive way than if it were able to wind down a scheme that had become unsustainable. It would be damaging for those businesses, the employees, and, ultimately, the economy. We do not support the Sinn Féin suggestion.