Mr. Tony Donohoe:

I thank Deputy Brady for his comments. His question contains an assumption that defined benefit is good and defined contribution is bad, which is not the reality. Defined benefit as a model has been shown to be unsustainable. As I said in my opening comments, we must nurse its long-term demise in the most sensitive and fair way possible. When there are no entrants to a defined benefit scheme, there are no new funds coming into it and by definition, it cannot carry on. At some stage in the future, there will be no new members and the last pensioner passes off this planet. It is an unsustainable model.

Deputy Brady used the word "risk", which is the most important word in this regard. Highly profitable companies removing risk is a legitimate business action because they want to maintain their profitability and, more importantly, their sustainability. This is apart from the issues of internal equity. In most of these companies, there are two groups of workers, one of which is on defined benefit while the other is on defined contribution, and the companies are trying to manage that. It is perfectly understandable that companies would try to remove that risk and they should be supported in doing so. That is not to say that companies should be walking away from their commitments. I will not comment on any particular companies but we look at some of these highly profitable high-profile cases, we will see that in these negotiations, nobody is walking away from anything. These negotiations literally went on for years in some cases. I would argue that in other cases, the outcome was much better for the workers. I can think of one company whose contribution to a defined contribution scheme was higher than what it paid into the defined benefit scheme but it wanted to remove the risk. The risk is the most important thing. There is nothing wrong with that but that is not the same as saying companies can walk away from their commitments without putting a viable and equitable alternative in place.

Defined contribution is the way of the world. This is not just an Irish phenomenon but one that is happening across the globe. Some countries such as Australia have had defined contribution funds as part of their pensions structure paying very good pensions for three decades. I question the assumption that defined contribution is necessarily inferior, whatever about the risk element of it. I would also argue that it is a more realistic option in this new world of work where people go through multiple careers.