Mr. Tony Donohoe:

While I am assured by Deputy O'Dea's comments on solvency, I do not fully agree with the assertion that solvent employers can simply walk away from schemes. Schemes are governed by trust deeds, which impose rigorous requirements on the trustees and a commitment from employers. It is not often done in the courts, but the latter can sometimes be exercised by making a contribution demand on the employer. That can be written into the trust deed. I will invite my colleague, Ms McElwee, to discuss some of the realities on the ground but such situations are normally handled through a process of negotiation. It is a sensitive process with many moving parts and we do not want something that would destabilise it.

DB schemes are set up to have a lifetime. While I have seen various figures, this is shown by the fact that between 70% and 90% of DB schemes are not taking in new entrants any more. There is no new money coming into them. I have seen one scheme at relatively close quarters where the younger members were pushing for the scheme to be closed because they could see where it was going. Younger people also tend to move around between different employments now and would prefer to have that control over their own pension pots. To put it bluntly, they felt that they were subsidising the significant pensioner liabilities on the scheme.

They viewed it as inequitable.

I will take this opportunity to make a related comment. The most important obligation in the complexity of pensions legislation is to do no harm and minimise the unintended consequences. There are business consequences in this regard, given what are huge liabilities in some schemes. Some companies look more like a pension fund with a company attached to it than a company with a pension fund. Were this debt to be brought in, what might look like a solvent company would very quickly become insolvent. The only way to negotiate out of that situation - I have cited some examples concerning retirement ages and member benefits - is to let time take care of it. Often, the remedy is a ten-year process. It is difficult to know how any agency - in this case, it is suggested that that be the Pensions Authority - would be able to take a view on the solvency of a company ten years hence. It could take a view in the immediate term, but that is rarely relevant to pensions discussions.

The Taoiseach raised an issue in a statement in the Dáil in response to questions. There are other unintended consequences. For example, I would be interested in knowing how the Bill might apply to semi-State companies. While it might not put such a company out of business, the legislation would make its debt so high that it would be unable to invest any more. That would have a serious impact on the public good, as large State-owned enterprises need to be able to borrow in order to invest in infrastructure. If the company cannot do that because of the pension scheme deficit on its balance sheet, that would create societal problems. I make this point just to show the Bill's potential unintended consequences.

If the Chairman does not mind, I will invite my colleague, Ms McElwee, who works with companies that are trying to go through this process, to reflect on the realities involved.