Mr. Brendan Kennedy:

The first and simplest question was asked by the Chairman and concerned whether the initiative to give employers responsibility for shortfalls originated with the Pensions Authority or the Department. It came from the Department and the Minister and it did not originate from the Pensions Authority.

Another question was what we have done in the Pensions Authority to address the reduction of defined benefit numbers over 25 years. To be clear, the role of the Pensions Authority is to ensure the Pensions Act is obeyed, to put it at its very simplest. That Act specifies that if a company has a pension scheme, it must follow certain rules. It does not say that a pension scheme must be set up, and currently it does not specify that a pension scheme cannot be closed. The role of the Pensions Authority, as defined in legislation since it was set up, has been limited to overseeing the pension schemes that exist. More broadly and less formally, it would be fair to say the question of whether employers set up pension schemes, as well as the level of benefits and contributions involved, etc., is seen and understood as an industrial relations issue rather than a pensions legislation issue. It is clearly arguable that if this legislation goes through, that will change. Until now, the question of whether there should be a pension and how much that pension should be has been an industrial relations matter for negotiation between employers and employee representatives. We have not had a role in that. Over the 25 years, as schemes have closed and others have been set up, it has not fallen under our responsibility. There is nothing in the Pensions Act to give us power to intervene in that space.

There is the question of the ability of an employer to absorb the cost if this legislation goes through. Our understanding of the proposed legislation is that the Pensions Authority's role would be limited to ascertaining how much a scheme needs to meet obligations and imposing that as an obligation on the employer. The ability of the employer to afford that amount is not intended to be part of the Pension Authority's remit. I should say two things in passing about that. If it did come within our remit, it would require a change in the way we do things and we would certainly need to acquire more expertise. It is a very complex issue. There is a more general point that would also have to be borne in mind. If ability to pay becomes a feature of the employer's obligation, it would also be necessary to decide that if an employer cannot afford pension scheme deficits, how will those deficits be dealt with? It would not be enough to say the employer does not have to pay the full amount but the pension scheme must be left open in any event. If the pension scheme is going to provide the benefits promised in the rules, the money must come from somewhere. Ultimately, one must make the decision as to whether somebody pays the money or people lose the benefits. There is no third way and it would have to be addressed if we went down that route. Obviously, I am not arguing for or against it but the matters must be taken into account. With the legislation as proposed, our responsibility does not include assessing the employer's ability to pay but rather what is required to pay the benefits promised in the scheme rules.

Should profitable companies be allowed to wind up schemes? This is a question for the Oireachtas and the Government rather than the Pensions Authority. The authority is a regulator. It is a very specific question but I suggest there is a broader question. It is not just about winding up schemes and the question goes to whether employers should provide pensions and if profitability is relevant. There have been various suggestions for mandatory or auto-enrolment universal pension schemes. That question goes to that kind of space. It is not a question for us as a Government agency and pensions regulator. It is a much broader question.