Mr. Terence Ahern:

My name is Terence Ahern and I am a member of the TSSA trade union. I am employed in the finance section of the Irish Rail subsidiary of CIÉ and I am a qualified accountant. I was recently elected as one of the four employee members of the 1951 pension committee. My views are shared by the other three elected members of the 1951 pension committee - Mr. Emmet Cotter, who is behind me, and Mr. Tom Ayres and Mr. Brian Connolly, who are in the Gallery. As regards the inquiry from Deputy Munster as to why Mr. Cortes said in his opening statement that we consider the 2013 funding plan legally questionable, there are various reasons for that, not least of which is the fact that our scheme, unlike private schemes, is a statutory scheme based on legislation enacted by the Oireachtas through the Dáil, the Seanad and the President and its solvency is guaranteed in the legislation. There is no evidence in the 2013 funding plan that contingency assets were considered in terms of meeting the funding standards nor any indication that unsecured undertakings were considered in meeting the risk reserve. Both of those measures are allowed by the Pensions Authority. There is also no evidence that the trustees or the pension committee made contribution demands of the employer and it is an open question as to whether the trustees and the pension committee were fulfilling their fiduciary obligations. These issues were addressed in the recent judgments delivered in the Omega Pharma and Element Six cases by Mr. Justice Charleton.

It is also interesting to note the company's replies to parliamentary questions, which are contained in sections 3.7, 3.8 and 3.9 of the document it issued approximately two weeks ago, on 22 February, wherein it discusses availing of extended recovery periods under the Pensions Act rather than fulfilling the statutory annual solvency obligation under the Transport Act. It refers to the Pensions Act, which private schemes must adhere to, but our two schemes derive their statutory basis from the Transport Act 1950, as amended.

It is very curious that the replies contain no indication that any legal opinion was sought by the company in terms of the approach it took to addressing the solvency issues. That was a key decision taken in 2008 or 2009 and referred to in other contributions this morning. We do not know if any legal opinion was obtained on the decision or if such opinion was favourable, adverse or neutral because the document is silent in that regard.

It is interesting to note that the example given in the company's reply at 3.8 seems to be apply to the private sector because it references a trust deed, and does not appear comparable to a statutory scheme. The example it gives of solvency seems to be what accountants call a going concern solvency rather than a winding up solvency, which is what the funding standards are all about. The reply at 3.8 references contributions by the employer not less than the amount recommended by the actuary as being required in conjunction with the future contributions of the members and the assets of the fund to enable the trustees to provide the benefits. The clear implication is that the scheme in question will remain in place over time, so it is a going concern assumption. However, under reply 3.1, which quotes rule 20 of our statutory scheme, it states that in every year the board shall contribute to the fund such sum as the board, after consulting the actuary, determines to be necessary to support the solvency of the fund. That makes it very clear that the board makes the determination, rather than the actuary. The board is obliged to consult with the actuary but is not bound by the actuary's opinion. Its role is to support and maintain the solvency of the fund. Solvency in this context is defined by the Pensions Authority as the legal body with the authority to so define.

Deputy Munster referred to the Waterford Crystal debacle. That involved a double insolvency scenario whereby the pension scheme in Waterford Crystal was insolvent and so was the employer. Thankfully, that is not the situation at CIÉ. As an employer, CIÉ is asset solvent. It may have difficulties from time to time in terms of cashflow constraints because the transport services it provides to the public are subvented but it is very solvent in terms of assets, as evidenced by the fact that its assets are held on the balance sheet at historical cost rather than current market value.

For those reasons, we question the legality of the funding plan submitted to the Pensions Authority in 2013. I have a copy of the funding plan, which I can give to the committee if it so wishes. Under the prescribed guidance of the Pensions Authority, a funding proposal is required to be signed by two parties: the employer and the trustees. I draw the attention of members to the fact that the 2013 funding proposal for the 1951 scheme is not signed by or on behalf of the trustees or the pension committee, which is curious and raises legal questions in its own right.

In terms of the fundamental issue as regards the two defined benefit schemes in CIÉ being statutory schemes based on legislation enacted by the Oireachtas, before I recently became an elected member of the pension committee myself and a colleague in Irish Rail wrote to the Pensions Authority on 25 October last year, seeking clarification as to whether the 1951 pension scheme was a defined benefit scheme for the purposes of Part 4 of the Pensions Act 1990, as amended. We sought clarity as to whether the pension scheme was required to adhere to the funding standard. That letter was acknowledged but it has not been answered.