Oireachtas Joint and Select Committees

Wednesday, 7 March 2018

Joint Oireachtas Committee on Transport, Tourism and Sport

CIÉ Group Pensions: Discussion

9:30 am

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I remind members, witnesses and persons in the Public Gallery to turn off their mobile phones. I welcome everyone to the meeting, particularly Mr. Ronan Gill, chief operating officer and chief financial officer of the CIÉ group. I also welcome Mr. Declan Carlyle, head of group human resources, CIÉ, Mr. Dermot O'Leary, general secretary of the National Bus and Rail Union, NBRU, and his colleague, Mr. Thomas O'Connor, Mr. Manuel Cortes, general secretary of the Transport Salaried Staffs Association, TSSA, and Mr. Terence Ahern of the TSSA's CIÉ pensions committee. I also welcome Mr. Greg Ennis, general secretary of SIPTU and Mr. Emmet Cotter, also of SIPTU.

I am procedurally required to read out the following. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

I invite Mr. Ronan Gill to commence proceedings with his opening statement.

Mr. Ronan Gill:

I thank the committee for the invitation to address it on CIÉ pension matters. I am the acting chief operating officer of CIÉ and my colleague, Mr. Declan Carlyle, is the head of human resources. I have a brief opening statement following which we will be happy to answer any questions the members have.

CIÉ wholly owns the three national transport providers, Bus Átha Cliath, Bus Éireann and Iarnród Éireann. Group employees are members of one of two pension schemes, namely, the regular wages scheme and the superannuation scheme. The scale of the CIÉ pension issue can be summarised as follows. The regular wages scheme covers approximately 75% of staff and accounted for €98 million, or 21%, of the total deficit, including risk reserve, as at December 2016. The superannuation scheme covers 25% of staff and accounted for €361 million, or 79%, of the total deficit, including risk reserve, as at December 2016. In 2013, both schemes submitted funding proposals to the Pensions Authority which, on the basis of certain assumptions, envisaged the schemes achieving solvency together, with the appropriate risk reserve by the end of 2023. At the end of 2016, the schemes did not achieve the target solvency levels that were planned for them at that date. As a result, they are required to submit revised funding proposals that will bring them back to solvency by the end of 2023.

The issues that face the pension schemes are those which face pension schemes generally. In common with all pension schemes, the cost of pensions is increasing by virtue of long-term interest rates that have been reducing, increasing longevity and, finally, increasing regulation of schemes to ensure that they adopt measures to de-risk schemes, secure pension benefits and protect pensions in payment. CIÉ's policy is to seek the agreement of scheme members through their recognised trade unions for proposals which are designed to restore the schemes' deficits. These proposals, once agreed and approved by the schemes' actuaries, can be submitted to the Pensions Authority by the schemes trustees. It is also CIÉ policy to engage fully in a process with the trade union group, facilitated by the Workplace Relations Commission, to achieve that objective. Unfortunately, that process is in abeyance. However, CIÉ continues to be available to engage to seek a resolution. CIÉ's policy in the interim is to operate the schemes in accordance with their rules, which are set out in statutory instruments. In all of this, CIÉ is seeking to secure the benefits of pensions in payment and the accrued benefits of the active membership. It is not a cost-reduction measure on the part of the company.

At the end of February, CIÉ published a comprehensive briefing note in response to a number of parliamentary questions. The note confirmed the following matters. CIÉ has always contributed to the schemes on the basis of actuarial advice and in full compliance with the rules of the schemes. The schemes are off-track as of the end of 2016 and, as such, the schemes' trustees have an obligation under the Pensions Act to submit revised funding proposals to the Pensions Authority. CIÉ's preference is that the employer and scheme beneficiaries, namely, the employees, should agree a proposal which can be submitted by the pension schemes' trustees to the Pensions Authority. The proposals that were being discussed in the process facilitated by the Workplace Relations Commission mirror changes that have already been made by the State and in other State companies, the principal change being to increase the retirement age applicable within the schemes. In consultation with the trade union group and based on a trade union group suggestion, CIÉ has developed a proposal for the regular wages scheme which would, if implemented, improve the security of benefits payable under that scheme. The main elements of that include: ensuring that scheme rules regarding retirement age align with actual retirement experience within the scheme; capping pensionable pay in the scheme at the greater of 3.3 times State benefit or current pay levels; providing an alternative pension scheme for pensionable pay in excess of the cap; and, in line with CIÉ's commitment to maintaining its contribution, maintaining funding of schemes at a maximum of 2.7 times employee contributions.

CIÉ regrets that there has been no substantive engagement as yet on proposals to address the risk to member benefits in the superannuation scheme. CIÉ has developed a proposal capable of securing retirement benefit levels and returning the scheme to solvency within the timeframe required by the Pensions Authority. The proposal is similar, in principle, to that developed for the regular wages scheme, namely, to change in-scheme rules regarding retirement age in order to: align scheme retirement age with the State retirement age on a phased basis; close the scheme to new entrants and provide an alternative arrangement for those who choose not to enter the remaining defined benefit scheme available within the group; and replace purchase in-scheme notional service with a best-in-class additional voluntary contribution, AVC, scheme. CIÉ has responded comprehensively and reasonably to all representations and requests from recognised staff representatives regarding the provision of independent advice. CIÉ also responded positively to a recent trade union suggestion aimed at progressing these matters.

I have already outlined the contributory factors to the current deficit position of the schemes. Therefore, the consolidation of CIÉ pension schemes in 1994, on a basis agreed with staff, is not the source of the current funding deficits. The 1994 consolidation resulted in improvement in benefits for members and an increase in the employer contribution ratio to the schemes from a matching contribution to a contribution of up to 3.6 times in the case of the superannuation scheme and up to 2.7 times in the case of the regular wages scheme. In return, CIÉ removed the requirement for funding proposals and balance sheet provision for the schemes.

On the questions that have been raised in respect of the schemes, statutory instruments provide clear segregation and independence in the roles and responsibilities of CIÉ, as the employer, and the trustees and committees of both schemes. Questions that are addressed to the pension committee are, therefore, a matter for it. It is not appropriate for CIÉ to engage on matters that are exclusively for the pension committee. CIÉ's contributions to the schemes are in accordance with the funding proposals submitted to the Pensions Authority in 2013. These contributions are near the maximum prescribed levels provided for within the statutory instruments.

Under the current rules, further increases in employer contributions above those levels would trigger a review of employee contributions.

That is an overview of the current situation from CIÉ's perspective. I will endeavour to answer any questions the committee may have.

Mr. Dermot O'Leary:

I thank the committee for providing us with the opportunity to outline our concerns regarding the problems associated with both the regular wages scheme and the 1951 superannuation scheme. I come before the committee in my role as general secretary of the NBRU, the largest front-line representative union in CIÉ and the only dedicated transport union in the country. However, I am also extremely conscious that we have a pivotal role to play in potentially resolving the issues associated with both schemes on behalf of the 8,600 staff across the CIÉ group who are members of the pension schemes. There are 16,700 people dependent on the scheme in total, between actives, deferred and pensioners.

The scheme structure is unique in that it does not fund pension in payment through annuities or approved retirement funds, ARFs, but pays for them directly from the scheme. Before moving on to some of the detail on both schemes, I should remind the committee and other observers that successive Administrations are responsible to some degree for a number of interventions on pensions over the past 30 years. These include the Pensions Act 1990, which introduced the actuarial funding certificate; the Social Welfare and Pensions Act 2005, which amended the 1990 Act and introduced obligations for off-track schemes; accounting standard FRS 102, introduced on 1 January 2015, which increased the liabilities through a change in accounting methodology; and the risk reserve, which was introduced on 1 January 2017 and which is a requirement to hold an extra 10% of the value of liabilities as a buffer.

Another interesting aspect is section 7(3) of the Pension Act 2005, which takes a long-term view of pensions and provides that the assets of the scheme must be invested in a manner designed to ensure the security, quality, liquidity and profitability of the portfolio having regard to the nature and duration of the expected liabilities of the scheme. Unfortunately, the pension schemes are subject to a short-term annual valuation, or end-of-year snapshot, which dictates the status of both schemes. Consideration may have to be given to decoupling from the minimum funding standard, MFS, to allow greater solution flexibility for all concerned.

The recent discourse regarding pension issues has been shrouded in accusation and counter-accusation. A large amount of distrust has been shown between the parties ever since the controversy over the CIÉ group placing both schemes within a funding proposal in 2013 without the knowledge of either the members of the schemes or the representative trade unions. The revelation regarding the funding proposal, which broke in 2015, led the unions to immediately seek meetings with the CIÉ group to ascertain what exactly were the issues with the schemes.

I should point out before moving on, that I am not, nor do I profess to be, an expert in pensions, actuarial analysis or all of the machinations associated with the stock market. I should also point out that we as a representative trade union are very central to practically all of the industrial relations issues across the companies in the CIÉ group. We have also been very involved in successfully staving off the worst excesses of the privatisation agenda of successive Governments. I make this point to illustrate that while we have a comprehensive knowledge and no little expertise in the sphere of industrial relations issues and those which directly affect our members, the intricacies associated with pensions occasionally require outside assistance.

In line with our trade union colleagues, we have engaged pensions advisers to assist in conducting an in-depth investigation of all of the issues surrounding the problems with both schemes. Their analysis became the basis for our initial engagements at the Workplace Relations Commission throughout 2016 and 2017. The NBRU's position on the issues at hand is simple enough to understand. We want to achieve a solution whereby the pension benefits and entitlements for which members of both CIÉ pension schemes have paid are honoured in full.

The background to the pension row dates back to 2009, when the CIÉ group approached the unions to discuss the then serious deficits in both schemes. At that time, these deficits amounted to approximately €500 million, of which the regular wages scheme totalled €150 million and the 1951 scheme totalled €350 million. The option presented to the union from then to 2010 and 2011 comprised of no pension increases for foreseeable future, no pensionable salary increases for three years and increased contributions from employees. The alternative suggested at that time was a decrease to pension benefits as staff retired. The unions resisted these suggested changes, though it should be noted that neither pensions nor salaries increased, at least up to 2016. There was one consistent line from the trade unions during the discussions in 2010 and 2011 that still has significant relevance today. The issue concerned was the level of contributions from the CIÉ subsidiary companies. Through a statutory instrument, the contributions were set at 3.6 times for the 1951 scheme, currently 2.7, and 2.7 for the regular wages scheme, currently 2.3. The argument put forward by the unions was that if and when the companies met the maximum figure permitted by the statutory instrument, a review of contribution levels would automatically be triggered.

What is significant here is the actuarial report of 2009, hereafter referred to as "the 2009 piece". This recommended that CIÉ should increase its contributions to 4.6 times for the 1951 scheme and 3.3 times for the regular wages scheme. CIÉ chose not to act on this recommendation. It is our contention that if the group had contributed to the maximum permitted under the statutory instrument or the recommended level suggested by its own actuary in 2009, the deficit in both schemes might now be significantly less.

Yet another concern is the 1994 piece, which is also central to the debate between the parties. It has obviously been interpreted differently by each side. The 1994 piece revolves around the solvency of the pension schemes and the interpretation of SI 323/2000, which goes to the very heart of the issues between the unions and the CIÉ group. The CIÉ group has described the issue as single-year solvency on the basis of the requirement of the actuary to make an annual report to the CIÉ Board. This is covered by SI 323/2000, which states, "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 and maintain the solvency of the Fund." It is also fair to point out that the same rule states:

... if the contribution determined by the Board under paragraph (1) to be necessary to support and maintain the solvency of the Fund (exclusive of any contributions arising under Rule 21(9)(b), Rule 29(1)(c) or Rule 39) will in any period exceed 3.6 times the contributions payable by the members during that period [I note that this refers to the 1951 scheme], the contributions payable by the Board and the members shall be reviewed.

This brings us back to 2010 and 2011, when the unions rejected an increase in members' contributions.

The NBRU, along with other unions, is not able to draw definitive legal conclusions on the 1994 piece, hence the necessity to seek independent legal advice to ascertain the validity or otherwise of our view that the solvency of the schemes should be maintained by the CIÉ board. We have also sought advice to determine the quantum of underfunding if, as we are suggesting, the scheme has been underfunded. We have also raised concerns that the CIÉ schemes are regarded as private pensions from a regulatory perspective, yet the governance of the schemes involves a mix of committees, trustees, statutory instruments and board and Ministerial oversight, all of which are similar to pensions in the public sector. The 1951 scheme also carries the State's burden concerning approximately 900 members who are D1 social insurance contributors and who therefore qualify for little or no State benefits, including the old age pension.

Finally, I wish to draw the committee's attention to the letter the NBRU wrote to the CIÉ board. It is included in our submitted documents. In this letter, we set out our concerns about how the debate had become skewed away from addressing the core issues and has descended into accusation, counter-accusation and acrimony. This correspondence has suggested the establishment of a forum, not necessarily industrial relations, whereby all stakeholders would engage under an agreed chairperson to fully expose all of the issues. This would allow us to agree on a satisfactory conclusion for the benefit of all the members of both pension schemes.

Mr. Greg Ennis:

On behalf of the members of SIPTU in the CIÉ group, we wish to thank the committee for this opportunity to outline our members' concerns with regard to the very serious situation surrounding the CIÉ pension schemes. SIPTU is Ireland's largest trade union, with more than 170,000 members. It has the largest number of front-line trade union members within the CIÉ group. SIPTU represents more than 5,000 members in the CIÉ group of companies, that is, Bus Éireann, Dublin Bus, Irish Rail and the CIÉ holding company. Our members in these four employments are quite understandably concerned about deficits in their pension schemes. More than 1,000 of such employees, who are members of the 1951 scheme, do not have recourse to the State pension when reaching retirement, with their occupational pension being their only future source of income upon reaching retirement.

I draw the committee's attention to the documents accompanying this submission. Appendix 1 is entitled CIÉ PENSION AND SUPERANNUATION SCHEMES. SIPTU very recently came into possession of Appendix 1. We have been advised that this document was prepared by CIÉ management in 2009. In the absence of a CIÉ chairman, SIPTU requests that this committee ask the group secretary of CIÉ to confirm the provenance and validity of this highly significant document.

This document sets out the historical background to the 1994 CIÉ pensions rationalisation agreement.

As part of this agreement, CIÉ’s workforce bailed out CIÉ to the tune of £73 million and, in return, CIÉ employees were given specific commitments on the future funding of its pension schemes and also in respect of post-retirement increases for CIÉ pensioners. The commitments on the future funding of the CIÉ pension schemes were made law by way of statutory instruments, namely, SI 323/2000 in the case of the CIÉ 1951 pension scheme and SI 205/2010 in the case of the CIÉ regular wages grade pension scheme. The agreement was effective from 1 January 1994 and CIÉ honoured it in full until 1 January 2009. The active membership of both CIÉ’s pension schemes and SIPTU are adamant that CIÉ has failed to comply with its statutory contribution rules since 2009, leading to the underfunding of the schemes in the intervening nine years.

I would now like to draw the committee’s attention to Appendix 1, which contains extracts from what we are led to believe is CIÉ’s own document prepared in 2009, which are nothing short of explosive. First are extracts frompage 3, "CIE Funding Level", and page 4, "Actuarial Valuation as at 31stDecember 2008". Due to the time constraints of my presentation, I would like to expand on these sections, citing specific extracts which are contained in the more detailed Appendix 2, when the committee deems it appropriate for me to do so. The extract from page 5 addresses "Possible Solutions". I would also like to expand on this section of the document later. The following extract is quite damning of CIÉ. I quote from what we allege is a CIÉ document:

Most CIE employees in membership of Schemes also realise that their Schemes’ Funds have not been immune to the downturn. However, many CIE employees realise that the deal in 1994 benefited CIE more than the Scheme members. They are aware of the commitments given by CIE in relation to funding etc. at that time. They will see the present predicament in which the Schemes find themselves as the time for CIE to deliver. It can be expected at the very least there will be some form of industrial action particularly in relation to point (ii). However, the bigger problem may come from a referral of the issues to the Law Courts. If that is done the rule covering the Board’s contributions will be examined. In addition, the Board’s intentions and commitments given will emerge as part of Discovery. The Minister of the day signed the Order giving effect to the terms of the Statutory Instruments (SIs). The Department of Transport and the Department of Finance were fully aware of the terms of the SIs including the mechanism triggering a review of contributions.

The more serious implications of the extracts included in Appendix 1 are as follows. First, CIÉ suspected in 2009 that it had a minimum legal requirement to at least fund its two pension schemes by an additional €11 million - that is in the last paragraph on page 4 - but that it may also have been legally necessary to fund its two pension schemes by an additional €26 million. That is in the first paragraph on page 1 and the fifth and sixth paragraphs of page 4 in the same year. Second, CIÉ expected industrial action across the company if CIÉ left the contributions rates as they were, as perpage 6. Third, CIÉ acknowledged that there may be a referral of the issues to the courts and that in such circumstances the rule covering the CIÉ board’s contributions would be examined, as per page 6. Fourth, CIÉ acknowledged that it made clear commitments to its entire workforce in respect of the future funding of the two CIÉ pension schemes and post-retirement increases for pensioners in the CIÉ pensions rationalisation agreement of 1994. That is in pages 3 and 6. Fifth, CIÉ may now owe hundreds of millions of euro in unpaid contributions to its two defined benefit pension schemes from 2009 to date.

A number of other questions now arise. First, why has CIÉ not already disclosed this document to the current CIÉ board, the Workplace Relations Commission and the CIÉ trade union group? Second, in 2009, was the then chairman of CIÉ made aware of this document and, if so, did he make the then Minister for Transport, Tourism and Sport aware of it? Third, in 2013, when funding proposals were submitted to the Pensions Authority, was the then chairman of CIÉ aware of this document? These were flawed funding proposals that made no provision for future pay increases, which the subsidiaries are now paying. Fourth, had any of the CIÉ trustees of the CIÉ pension schemes or any members of the CIÉ pensions committees knowledge of this document and, if so, what have they done about it, particularly in consideration of their legal fiduciary duties towards the 10,000 active members of both CIÉ pension schemes and the thousands of pensioners who have not had an increase in their pensions in almost ten years, since July 2008?

I will make some additional comments. CIÉ’s responses to the many parliamentary questions submitted to the Minister for Transport, Tourism and Sport correctly reference the fact that CIÉ has funded independent actuarial resources for the trade union group, TUG. However, it should be noted that when company-union discussions commenced nearly three years ago, the TUG was not made aware of the document accompanying this presentation in Appendix 1, or of the potential legal ramifications of the decisions taken by CIÉ in 2009. It is now abundantly clear to all stakeholders that the core issues that require clarification are, in fact, legal issues surrounding the CIÉ pension contribution rules, which are set in statute, that is, the law of the land. If the TUG knew three years ago what it knows now, SIPTU would have insisted on an independent legal opinion being sourced before any discussions took place in an industrial relations forum. SIPTU can fully understand now why CIÉ was happy to fund independent actuarial resources on behalf of the TUG but not an independent legal opinion.

On the matter of independent legal opinion,if CIÉ is so sure that its interpretation of the pension schemes’ contribution rules is correct, why then is it so afraid to accede to the request by its 10,000-strong workforce and 50% of one of its pension committees for funding for an independent legal opinion? The answer to this simple question is contained in the accompanying document to my submission. CIÉ itself was of the view in 2009 that it might fail to comply with the statutory instruments if it followed the course of action which, ultimately, it pursued. CIÉ has no moral or legal entitlement to deny its workforce funding for an independent legal opinion.

A complaint was made by pension scheme members on 12 October 2017 to the Pensions Authority pursuant to section 59(1)(a) of the Pensions Act 1990. This complaint is attached under Appendix 3. It references concerns that appropriate contributions have allegedly not been made by CIÉ since 2009 and in so doing contravene the two relevant statutory instruments of 2000 and 2010.

A PricewaterhouseCoopers report was commissioned by the Department of Transport, Tourism and Sport in 2002. I have a full copy of the report if the committee wants to see it and have attached the cover page and relevant page - page 71 of 115 - to the documentation supplied to the committee.Section 8.1.5 on page 71 states: "There is no limit to the employer contribution level in Scheme B." That is in Appendix 4 to my submission. Here we have a report commissioned by the Department in 2002 saying there is no limit to the contribution in the 1951 scheme.

In conclusion, the emergence of what we have been advised is a CIÉ document as per Appendix 1, entitled "CIÉ Pension and Superannuation Schemes",is a game changer. There is now an irrefutable case for funding to be made available by CIÉ for an independent legal opinion on all these matters. There is also now an irrefutable case for the Minister for Transport, Tourism and Sport to initiate an independent investigation into the governance of the CIÉ pension schemes. Finally, there is now an immediate requirement for CIÉ’s 1951 scheme pension committee to answer all of the unanswered questions which it was asked and did not answer when the same committee was fully functioning last year.

I trust that this brief submission to the joint Oireachtas committee will assist somewhat in ensuring that clarity is brought to bear on these most serious of matters affecting thousands of concerned CIÉ workers and pensioners. We respectfully request that the committee forensically probe the options, CIÉ decisions and the subsequent implications of Appendix 1,which have the potential to have an extremely negative effect on our members' pension prospects. In so doing, it is to be hoped that the committee will help ensure that action is taken by CIÉ to protect the future pension benefits of our current members, deferred members and the existing CIÉ pensioners.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I thank Mr. Ennis for his presentation and call Mr. Manuel Cortes.

Mr. Manuel Cortes:

I thank the Chairman for allowing us the opportunity to come here today to present of behalf of our members the many concerns they have about the CIÉ group pension scheme situation. TSSA members work in CIÉ, Dublin Bus, Bus Éireann and Iarnród Eireann in the clerical, supervisory and executive grades. Our members are salaried staff and as such are members of the CIÉ staff pension scheme of 1951. It should be noted that we have members who on retirement will only have access to a CIÉ pension, namely, D class staff employed prior to April 1995, and members who will have access to a combination of both CIÉ reduced rate and the State pension, namely, A class staff employed after April 1995.

In the context of giving the committee some background, in 1994, as others mentioned, five pensions schemes were combined to leave us with the two current schemes, the CIÉ staff pension scheme 1951 and the pension scheme for regular wages staff. At the time, the two current schemes were in surplus. This allowed the CIÉ board to merge the other three schemes that were closed and in deficit into the current schemes. It was accepted by allowing this to occur that CIÉ would ensure the solvency of the two remaining pension schemes. In fact, this was then backed by statutory instruments, SI 323 of 2000 and SI 205 of 2010. Rule 20 states: "In every year there shall be a contribution from the Board to the fund of such sum as the Board after consulting the actuary determines to be necessary to support and maintain the solvency of the fund." Our contention is that this has not been happening.

The management of CIÉ approached the trade union group in 2010 to present the figures for the schemes at that time. Due to the situation of the economy at that time, management expressed concerns on the financial health of the pension schemes. As part of the presentation to the trade union group, the usual solutions, none of which was palatable, were tabled to the trade unions. These solutions ranged from increased contributions from members to change of benefits and even closing scheme to new entrants. At the time we pointed out to the company that, as per the scheme rules, the company was not making contributions to the required level - there is an error in the document that we sent to the committee which stated "3.6%" and should have said - of 3.6 times the employee contributions. The company had been making a contribution that was equivalent on average to 2.8 times the employee contributions. We stated clearly that until such time as this gap had been bridged we would not enter into any discussions with the company.

Since then, no further meaningful discussions have taken place with our union. We have repeatedly asked for full and frank independent advice to assist the process, in particular, echoing what others have already stated, independent legal advice, and this has been denied. There is no way that we will engage in further talks until this request has been granted. That is our clear position. We need to have independent legal advice before we engage any further with the company over these issues.

The talks at the Workplace Relations Commission have been suspended. We are a union that is renowned for trying to engage with employers at all levels to try to resolve issues through negotiations but what we cannot do is go into talks with a gun loaded against our members. That we do not have the full facts and that we have been denied access to independent legal advice means we are in no position to re-engage with the company at this point.

It is worth noting the agreement that was reached with the company in 1994 for the rationalisation of the scheme - it is in our report, a copy of which has been furnished to the committee members. I will not go through every issue but suffice to say the committee should note our members bailed out the scheme. The bailout by the company's employees, our members who are contributing week in week out, was in today's money in excess of €180 million. We sank the cost of the administration of the scheme, which is €1.5 million per year. It is now being paid from the funds within the scheme. We have honoured that side of the deal but the employer has failed to fully act on rule 20, by not ensuring that the scheme is fully funded. That has been our major contention.

To conclude, I will make some further remarks. First, CIÉ is a semi-State employer. There was a recent report conducted by McCarthy in 2011. McCarthy found that the company had a low-pay profile, with low employer pension contributions. In fact, out of the 11 schemes that McCarthy looked into, the one that covered our members within the CIÉ group was eighth lowest when it came to a low-pay profile. These are not people with lavish pensions and salaries. These are hardworking people who are contributing to have some dignity in retirement and the company is currently not funding the scheme to the level it should to allow them to do so.

Our members are further concerned that both pension schemes are showing mild financial improvement over recent years. As the committee will be aware, there has been a recovery in the Irish economy, in bond markets - but not much - and in equities. The company still appears determined to attack the defined benefit scheme to the detriment of our members.

I repeat that, as a trade union, we always look to act in the best interests of our members. We are always prepared to engage in discussions with employers on any issue, including pensions, but we are not prepared to do that unless we have a level playing field. We have asked repeatedly for us to be given access to independent legal advice and that has not been forthcoming. As a result, we will not engage any further with the company until that has been achieved. The committee has heard the same from the three unions on this point and I hope that the committee will use its good offices to ensure that the company sees sense and allows us to have that advice. If the company is so confident that it is right, then this legal advice should not prove problematic to it and will, I suppose, prove that what the company has been telling us is correct. We suspect that the reason this legal advice is not forthcoming is because we are right and the company is wrong. It is our firm view that the company has flouted the law of the land. This is a statutory scheme. It was set up with statutory instrument and the company is not compliant with its obligations to fund the scheme.

I thank the committee members for listening to us this morning. I will take any questions the committee members wish to throw at me.

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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I will take two Oireachtas Members at a time and I will allow two or three questions each. The first, for the Government side, is Senator Feighan.

Photo of Frank FeighanFrank Feighan (Fine Gael)
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I welcome the witnesses. I do not profess to be an expert on pensions. I come from a self-employed background and I employed between 30 and 50 people. They were not members of a union. My knowledge of unions was not great but if a worker had wanted to be a member of a union, I would have been only too happy. The business closed five or six years ago and the staff got their entitlements.

As self-employed people, like most, we lost everything. My mother did not have a pension. We do not have pension. That is the case for the tens of thousands of self-employed around the country. As a pension scheme, at the time, rightly or wrongly, self-employed people bought bank shares in AIB or Bank of Ireland. That was one's pension and one's lump sum. Those bank shares are worth nothing. We are here today talking about pensions, and rightly so, but there are tens of thousands of self-employed people who have no pension and no rights. I want to put that on the record.

I am not sure what we can do as a committee. ESB, Aer Lingus and Coillte are rightly here highlighting an issue but we are the transport committee. We are not the pensions board. I have listened to ascertain what we can do. Mr. Cortes stated that the union wants independent investigations from the Minister. That sounds appropriate and perhaps, as a committee, we should call for that.

I saw a press report stating that SIPTU wrote to CIÉ to seek staff meetings. Have staff meetings caused passengers disruption? I take a bus to the Houses and a train home to Sligo. I do not want passengers to become collateral damage in the context of an issue that could resolved with the assistance of the Pensions Authority or some other body.

I am confused about what changing the scheme rules regarding retirement age to align with actual retirement experience means. Could the witnesses elaborate on capping pensionable pay at the greater of 3.3 times State benefit or current pay levels? This committee can make recommendations. Everyone is coming in here today and it highlights an issue that must be resolved but I am not sure what we, as a committee, can do. Perhaps the witnesses can tell us what we can do. I am just not sure. We will all feel good about ourselves outside but where will it end up after this? People call on Ministers to intervene and CIÉ and CIÉ workers work extremely hard and provide a great service. Forgive me, I come from a self-employed background. Are we then talking about having ESB in next week, Aer Lingus the week after and Coillte the week after that? We, as a transport committee, would be dealing with pensions when there are many other issues with which we could be dealing. I am far more informed as a result of this meeting than I have been in the past five years so if it is just this one thing, it is quite important.

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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The rationale for this meeting is the fact that approximately 10,000 employees of CIÉ face an uncertain future regarding their legitimate expectations. They have paid contributions to pension schemes over many years. I received, as, I am sure, have my colleagues, much correspondence from CIÉ employees who are very worried about the future. They fulfilled their side of the obligation in terms of making their contributions but it would appear that the CIÉ Group has not fulfilled its side. As a consequence, there is under-funding and an issue regarding the solvency of two pension schemes. While I am good friends with Senator Feighan, I would disagree with him. I think we have a responsibility to hold the board of CIÉ to account. I welcome the fact that not just the unions are here today to answer questions but also representatives from the CIÉ Group. Does CIÉ accept that, in the context of the rationalisation plan in 1994 whereby five schemes were amalgamated into two, there was a requirement by law set out by way of statutory instrument for CIÉ to ensure that these two schemes met their solvency requirements? Mr. Ennis alluded to Appendix 1 regarding a document which he contends is a CIÉ document. Can the representatives from CIÉ answer quite clearly whether this is a CIÉ document? A simple "Yes" or "No" answer will suffice because the contention is that it is a CIÉ document. If it is, it poses a raft of further questions.

It would also appear that the three unions represented here are all singing from the same hymn sheet and have one basic requirement that they feel would empower and enable them to negotiate with CIÉ to bring about a resolution. This involves obtaining independent legal advice. I would happily support Senator Feighan's recommendation that we as a committee would recommend through the Department and Minister that funding be made available so they can get independent legal advice. The CIÉ Group repeatedly says that it will not impose any change relating to the pensions without consultation with the employees. Does the reason it will not impose any change relate to the fact that there is a legal requirement to which it must adhere?

During Mr. O'Leary's contribution, he referenced statutory instruments and legislation. What does he think our role as Members of the Oireachtas is regarding the difficulties facing CIÉ? Could the representatives of the unions give their opinion as to what makes a CIÉ defined benefit scheme different from any other defined benefit scheme? Why did the 1951 pensions committee resign en masse? I understand that there was no meeting since before September 2017. I think elections might have been held and a new committee is in place. Has that committee met for the first time since its election?

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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We will take responses from the witnesses. Mr. Gill is first.

Mr. Ronan Gill:

Hopefully, I will capture all the questions. If not, please come back to me. In response to Senator Feighan's question about alignment of retirement age, the schemes have rules around when someone can retire. In the 1951 scheme, a person was entitled to retire at 60 with pension payable at 60. The actual retirement age within the scheme is moving up towards State retirement age as the proportion of A class membership increases, so the actual retirement age in the scheme at the moment is, on average, 63. The scheme has to value its liabilities on the basis of the rules relating to it. The reality is that people are working for longer and the reason for this is because they do not have integrated pensions. Therefore, they will be solely reliant on their scheme pensions. By aligning the State retirement age to represent the average, we would get a reduction in the liabilities in the scheme and this would allow us to deal with the scheme in terms of how it invests. A similar issue arises in the regular wages scheme where the rules of the scheme are not aligned with the actual experience. Deputy Troy is right. CIÉ does not have the power to make those changes. Those rules are set out in a statutory instrument and would require a change to the latter, which requires a consultation process. CIÉ is recognising the reality that we must do things by agreement and if we do not have agreement, nothing changes. If we do not have agreement, the risk in the scheme essentially falls on to the active membership. Hopefully, that deals with that question.

On capping pensionable pay at the greater of 3.3 times the State benefit or current pay levels, it is like a seesaw. One either balances the seesaw by putting more assets in or by controlling the liabilities. The liability comes from the benefits being paid out to the members. If there is no cap on that benefit, the actuarial assumption will drive it up by virtue of inflation over time so one ends up with a very significant liability.

It is almost like throwing petrol on a fire. By capping it at a level, we are linking ourselves to some form of inflation-proofing but, at the same time, capping our exposure. We chose the State benefit because it will move as the State responds to inflation. The reality is that average wages in the State and in CIÉ have been moving ahead of inflation in recent years. It is drawing an increasing liability to the schemes. The proposal to link it to State benefit seeks to cap the liabilities in the scheme. It is something that will require a statutory instrument.

Deputy Troy asked whether, arising from the 1994 consolidation, the solvency issues of the scheme arose because we were not making the maximum contribution of 3.6 times in the case of the 1951 scheme or superannuation scheme or 2.7 times in the case of the regular wages scheme. I agree with my colleagues in the trade unions. There has been a breakdown in trust. I could sit here and say that the world is flat and they will say that it is round. The place for us to deal with these issues is the Workplace Relations Commission. We have committed to funding independent advice for the trade union group through the commission. It is the appropriate mechanism to establish whether CIÉ is at the root of it - I say we are not - and to get a sense of the trade union's position that CIÉ is at the root of it.

The employer contribution to the total scheme is in the order of €50 million a year. It is up from €17 million in 1994 and pre-1994. It is not that we have been short in funding the schemes. We are funding the schemes in accordance with the statutory instruments that require us to fund on the basis of actuarial advice. That is my position and I respect the position that has been articulated by the trade unions. The best place to get clarity on this is through the Workplace Relations Commission. There is an established mechanism within the State whereby we can agree to disagree or get to an agreement on what the issues are. We do not believe, on the basis of actuarial advice, that additional funding is the way to resolve this. The scheme's liabilities, as I said in my opening statement, are in the order of €450 million. Additional funding will not sort that out. The rules of the scheme, if we move up from the existing levels of contribution, which would be in the order of a 10% increase, would move us up from €50 million to €55 million but €5 million will not make any difference to this. It is a lot of money but the numbers are very big. What is needed is calm and prudent reflection on what the advice is and on what changes we can make now. My mother used to tell me to start investing in my pension when I was 22 or 23, to make small changes and move forward. That is what CIÉ wants to do and we believe the place to do it is in consultation with our colleagues in the trade unions through the Workplace Relations Commission rather than through any other mechanism.

To answer the detailed questions on Appendix 1, that is the way it should be dealt with. I am not in a position today to say whether it is a complete CIÉ document. It may be an extract from a document. I am not in a position to say it is complete. I will refer-----

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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Mr. Gill is the person who was designated to come in and represent the CIÉ Group today. One would imagine he would be in a position to confirm whether it is a CIÉ document.

Mr. Ronan Gill:

With respect, I would have to see the document. I have not seen the document as it is presented here. I would need to see whether Appendix 1 - it is referred to as an appendix - is part of a larger document. It is quite possible for us to take individual lines from particular documents and read them in a particular way. The appropriate way for us to deal with this is through the Workplace Relations Commission. The factual differences that may arise between us can be clarified through that process. CIÉ confirmed to the Workplace Relations Commission in October of 2017 that it would fund advice through it. That was primarily actuarial advice but it also made provision for other professional advice around the legal and regulatory framework that applies to these schemes. I hope I have dealt with the point the Deputy raised earlier.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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In the context of what Mr. Gill has just said, it might be useful if one of the union representatives clarified what Appendix 1 of the 2009 document is.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Will Mr. Ennis come in on that point? We do not want a cat-and-mouse situation.

Mr. Greg Ennis:

This document dates from March 2009. It has a page 1 and a page 7. It has introduction, options and recommendations sections, that is, a start, a middle and an end. If it walks like a duck and quacks like a duck, it is a duck. It is not an appendix to any other document. It is an appendix to my submission. I have not had the pleasure of meeting Mr. Gill before. He was asked a simple "Yes" or "No" question. Perhaps Mr. Carlyle knows the answer. It is either "Yes" or "No". We absolutely believe this is a CIÉ document. It is damning on CIÉ.

The other point Mr. Gill made is that we were not short on funding. The evidence is quite clear that in the 1951 scheme, 2.8 times was paid when the maximum was 3.6 times. On the regular wages scheme, the maximum was 2.7 times and 2.3 times was paid. It has fallen short. Multiply it by nine years. One wonders why we have a problem. The company submitted plans to the Pensions Authority, which is back looking for more plans now which were off-track. They do not include pay increases that have already been accepted by CIÉ and its subsidiaries. We will fall off the edge of a cliff in a number of years. It needs to be looked at. I agree with my comrade, Manuel Cortes, that we cannot engage seriously in the dark without getting legal opinion on all of the items in this. Someone needs to get a hold on this. I do not agree with everything Senator Feighan said. I think he and Deputy Troy agree on one thing, which is that they should be calling for a full legal opinion. I thank the Vice Chairman for bearing with me.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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We will not have a cat-and-mouse game between the employer and the trade unions. We will return to Mr. Gill to conclude.

Photo of Frank FeighanFrank Feighan (Fine Gael)
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I called on the Minister for an independent investigation. If that includes legal opinion, so be it.

Mr. Greg Ennis:

I am sure that could be carried out by a legal person.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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We are losing time. Will Mr. Gill conclude? We will then move on.

Mr. Ronan Gill:

I believe I answered Deputy Troy's question about whether or not we can impose any change. The answer is that we cannot impose any change. The changes to the schemes would require amendments to statutory instruments, which requires a consultation process and agreement. There was a question on the 1951 committee. I am here to represent CIÉ. What occurred was the worker elected members of the scheme resigned and the employer members remained in place. There has subsequently been an election and four employees of CIÉ have been elected to the committee. The committee has not yet met.

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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There was a requirement to meet within 14 days of 5 February, was there not?

Mr. Ronan Gill:

There was a requirement to meet within 14 days. A meeting requires a quorum, which must include one employee-elected member and one employer member. The employee-elected members were not available to meet within that timeframe.

Mr. Dermot O'Leary:

The elephant in the room is the legal opinion being sought. All answers to all questions avoid the elephant in the room. It is fundamental that the issue is addressed, hopefully today, by CIÉ and that it will agree once and for all to fund that legal advice.

Let me be very clear about the Workplace Relations Commission, the trade union and our colleague engaged at the commission in good faith. There seems to be much agreement between Mr. Gill and me this morning. It is surprising because we could not get agreement all along and all of a sudden we are getting agreement. We agree that trust has broken down. The fundamental problem with the Workplace Relations Commission is that in recent years the Minister has said he cannot intervene in industrial disputes. The ramifications go far beyond any industrial dispute.

There are statutory instruments and legislation covering it but, in the absence of legal opinion, we are not at liberty to engage with the Workplace Relations Commission on behalf of our membership. The commission is a fine institution at which a lot of good business is done by trade unions and companies. I wrote a letter to the board and sent a pack asking for independent legal advice. I also asked that, because of the complexity of the issues, the forum should not be an industrial relations forum.

In response to Deputy Troy, I said that many decisions were made by successive Administrations in, for example, 1990 and 2005, and including those relating to FRS standards. They were all passed by the politicians in the Legislature. The answers I give to questions come with a caveat until we get full sight of all the issues at the heart of the problem. There is nothing to stop the Legislature removing CIÉ from the requirement to be in the funding proposal or part of the minimum funding standard because there are many organisations in such a position. If, after full sight of all the facts, politicians want one there is a role for them.

I am happy to hear Senator Feighan's egalitarian view of trade unions and their entitlement to represent their members. His great leader made a pitch for banning strikes in essential services as part of his campaign to become Taoiseach and the Senator will not need me to spell out our view of his party. He asked about staff meetings. The only time our members do not provide a service is when they are on strike. Thankfully, we live in a democracy that allows members to engage in industrial action against an employer if necessary and we will never apologise for that.

Photo of Frank FeighanFrank Feighan (Fine Gael)
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Is Mr. O'Leary saying that when there are staff meetings, passengers-----

Mr. Dermot O'Leary:

The Senator is saying that, I am not.

Photo of Frank FeighanFrank Feighan (Fine Gael)
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I am reading from a statement in the Irish Independentfrom January, which indicates that when staff meetings happen, passengers-----

Mr. Dermot O'Leary:

"No" is the answer.

Mr. Greg Ennis:

"No" is the answer. We work within the Industrial Relations Act 1990.

Mr. Dermot O'Leary:

I agree with the Senator that we are not in a star chamber. We also know the role of the committee. The Workplace Relations Commission is not an option for us because it gets the Minister off the hook. The Minister should be on the hook to provide direction to CIÉ or funding from his Department. There are 16,700 people involved in these two pension schemes and a back-of-the-envelope exercise, giving each of them five family members, brings it to 80,000 people, which amounts to the total votes for 20 Dáil seats. There is a significant cohort of people who would take a very dim view of individuals washing their hands of this matter and not using their good offices to resolve it.

Photo of Frank FeighanFrank Feighan (Fine Gael)
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I did not get involved in politics for Dáil seats or anything. We have different views but I can imagine the emails coming in now. It is not about Dáil seats but about getting this right.

Mr. Dermot O'Leary:

I am directing my comments at politicians in general, not the Senator. The people we represent, across the trade union family in CIÉ, will take a very dim view of politicians who do not act. The only way they can reflect that is through the ballot box.

Mr. Greg Ennis:

We met the Minister, Deputy Ross, on 5 July or 7 July 2017, arising from a 21-day strike in Bus Éireann, and we sat in these very seats in February 2017. The Minister assured us he would set up the transport forum no later than September or early October. Ten of his officials were present, as were many of my comrades, and we raised the concerns we had about CIÉ pensions but nothing has happened since then. We are now staring into an abyss, where pay increases are being paid but not provided for in any pension proposals. Pensioners are expecting parity increases but have not got them in ten years and nobody seems to be doing anything. We will not, and cannot, engage any further to fix this matter until we get the legal opinion and until everyone is as clear on the 1950 legislation and the statutory instruments as we are. In the context of the important document we have put forward, it is beyond me how the company can send people here who cannot confirm or deny its authenticity. We are absolutely sure it is a CIÉ document and it has massive implications. People may have not have had the chance to read it, with the weather being as it has been, but they should. Perhaps Mr. Carlyle is aware of it.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Does Mr. Ennis want to respond to any of the questions from members?

Mr. Greg Ennis:

Deputy Troy talked about responsibility. I do not read the Irish Independent, so I cannot comment on the question of meetings. The support for resolving this from Deputy Troy and Senator Feighan is important.

Mr. Manuel Cortes:

Deputy Troy asked what the difference was between the CIÉ pension scheme and other defined benefit schemes. The answer is that it is there by statute, so if somebody is not meeting their obligations, as we believe is the case in respect of CIÉ, it is flouting the law of the land, the law which lawmakers, such as the committee members present, have put in place. Unlike other schemes, it is enabled by statutory instruments. If CIÉ is flouting those instruments it is contradicting the wishes of the Dáil and the political process in Ireland.

We were asked what the committee could do. If it were to call for the Minister to set up an independent inquiry it would be a very powerful call and would be very well received by the unions because we have highlighted a number of areas where we feel the CIÉ group is not in compliance with its legal and statutory obligations. For us to re-engage with the company in any forum we would need to hear from them that they will fund independent legal advice but its representatives have evaded giving an answer today.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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I was a bit late arriving so I missed the correspondence and offer my apologies for that. I am deeply disappointed but not surprised by the Minister's correspondence. I believe he has let his entire Department down because this is a very serious issue. He said it would be inappropriate to attend but that is a nonsensical statement. The pensions are on a statutory footing and are on foot of a ministerial order so there is an onus on the Minister to come in here and answer questions and he needs to take charge of this. I support the calls for an independent investigation and for the Minister to agree to fund independent legal advice.

Correspondence relating to this meeting was sent out last Tuesday.

When I queried it yesterday, I was told that the Minister's office was informed on the Friday but the invitation was sent out on Tuesday. We decided on this meeting more than four weeks ago. From the committee's perspective, when we request a Minister to attend a transport committee, is it standard practice that he or she is just given one week's notice? Some four or five weeks' ago we gave a commitment to hold this meeting. Given that everyone else has a schedule, and I am aware that a Minister's schedule is especially busy, if it is standard practice that the Minister is just given one week's notice then it is a dismal failing on behalf of the committee. It is sloppy and slack. All of the representatives are at the committee today and the Minister is, yet again, absconding from his responsibilities. If it is the case that the committee fell down with regard to administration by sending the request just one week in advance of the meeting, then we need to examine the matter clearly. All of the representatives are here today and we expected the Minister to attend. Giving him the excuse of having only one week's notice is letting him off the hook. That is not what this committee is about.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I cannot account for the Minister's movements. I can only tell Deputy Munster that he is out of the State. That is why he cannot attend today.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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A week's notice did not help that. We decided this-----

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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It was seven to ten days-----

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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-----but apart from that, the Minister has said that he did not think it would be appropriate for him to be here. That is a ridiculous statement to make, given that the Minister is in charge, the pensions are on a statutory footing and he has a legal obligation to ensure they are upheld. Mr. Dermot O'Leary referred to the 16,000 people who will be dependent on CIÉ pension schemes. Any collapse of that fund would be far greater than the Waterford Crystal debacle, which affected some 1,500 people as opposed to 16,000 people. This puts into context the sheer scale and magnitude of what we are dealing with here. It is the importance of the matter.

In its opening statement, SIPTU referred to the 2009 document. I took a quick glance at it and the section on possible solutions allowed for property contingent assets. Nine years ago it was suggested that contingent assets were a possible solution in the 2013 funding proposals submitted to the Pensions Authority. Will the CIÉ witnesses clarify if it made provisions for the use of such contingent assets with regard to the risk reserve for both schemes? I understand this was allowable by the Pensions Authority.

Mr. Gill has said that he could not confirm whether or not that document existed, or that he does not recollect ever having read it. Will Mr. Carlyle confirm if he has had sight of that document or if he is aware of the document? From the clarification we have received, I understand it is a small enough document. It was small but very significant. I find it a little strange that having a week's notice and having been aware that the issue has been raised over a matter of months, the two CIÉ representatives would come to the committee and say they had no knowledge of the document or have not done some research in advance of the meeting.

Everyone, from the committee's perspective, is clear that all parties have previously sought and are still seeking independent legal advice. Given the evasiveness of the Minister and the lack of knowledge - to be fair, the witnesses - of the documents we are discussing, I believe it is all the more important that we have that independent legal advice to get an independent perspective on matters and to have independent answers to the questions that have been posed by the workers' representatives. If nothing else comes from the committee meeting today, that should be it. He can hide all he wants but I do not believe that we should allow the Minister off the hook. Perhaps we can get a seconder here today for this committee to call on the Minister to hold an independent investigation into this debacle.

The National Bus and Rail Union, NBRU has said that if CIÉ contributed up to the maximum threshold for both schemes there would be no problem today, or at the very least it would just be a lower deficit. Will the witnesses confirm this and expand on the point?

With regard to the CIÉ 2013 new funding plan, the unions have said there was no engagement, or very little engagement, with them. Can the witnesses guarantee, in front of this committee today, that the unions will be at the table and there will be engagement? Can that guarantee be given categorically? As with the independent legal advice, there is a reluctance to do this. What does management fear from independent legal advice? I cannot think of anybody who would be against a person wanting to get a clear and independent view. What is the fear around having union involvement and negotiations at the table? The witnesses have admitted that there is bad feeling, and it is perfectly understandable. What is the fear to date in the context of refusing to acknowledge free independent advice?

Turning to the Transport Salaried Staffs' Association, the TSSA, in their opening statement the witnesses said that the claims of the 2014 funding plan were not legally sound. Will the representatives from the TSSA expand on this?

Photo of Mick BarryMick Barry (Cork North Central, Solidarity)
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This time last week we were getting a lot of weather warnings. We were told there was to be a blizzard. A blizzard is particularly dangerous because one cannot see what is really happening. At today's hearing we are speaking about pension schemes, statutory instruments and legal opinions. There is a danger that this is a blizzard of big words and we cannot see exactly what is happening. It is important that the committee sees exactly what is happening in this matter. Something very significant and interesting happened at this committee meeting today. A contribution was made to the committee by Mr. Greg Ennis, who I believe the Vice Chairman has just promoted to general secretary of SIPTU.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I was reading from notes.

Photo of Mick BarryMick Barry (Cork North Central, Solidarity)
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The Chairman may be a few years ahead of the game there. Mr. Ennis said that he had a document that was, in his words: "explosive" and a "game changer". Mr. Ennis said it was a 2009 document prepared by CIÉ management that basically outlined in advance what we have seen happening over the past ten years - the fall off in CIÉ management making the contributions necessary to the CIÉ workers' pension fund. Mr. Ennis also said that the document expressed a fear that this could provoke industrial action. If one was on the board of CIÉ or another top position in CIÉ management, the worst nightmare would be industrial action. According to Mr. Ennis, this was not the worst nightmare of the senior people within CIÉ.

The document, which claims they had a greater fear, reads as follows:

However, the bigger problem may come from a referral of the issues to the Law Courts. If that is done the rule covering the Board's contributions will be examined. In addition, the Board's intentions and commitments given will emerge as part of Discovery. The Minister of the day signed the Order giving effect to the terms of the Statutory Instruments (SIs). The Department of Transport and the Department of Finance were fully aware of the terms of the SIs including the mechanism triggering a review of contributions.

If that is correct then it means senior people in CIÉ feared the legal implications of the actions that were taken, and I think that is explosive and is a game changer.

Earlier, Mr. Gill was asked to confirm, by simply saying "Yes" or "No", whether the document was produced by CIÉ. Fortunately, in my younger days I learned the skill of shorthand so I recorded what he said, word for word, which I shall read to the committee as it is very significant. He said, "I am not in a position to say whether that is a complete document. It may well be an extract from a document." He has not denied it is a CIÉ document. Any reasonable person who listened to what he said would say that is as close as one can possibly get to an admission that the document we are discussing is, at the very least, part of a CIÉ document. I think that situation is explosive and many questions flow from it. Were the contents of the document made known to the Minister at the time? Were the contents of the document made known to subsequent Ministers for transport? If so, did they keep that information from their Cabinet colleagues? The implications of this are quite serious and significant.

I started by talking about the recent weather warnings. Last week, I managed to travel from here to my home in Cork. I would not have been able to do so if it was not for the work of the people who wear orange jackets. I mean the men and women who were on duty and went out in bad weather to ensure that tracks were cleared and safe. I know well how difficult and stressful it is to drive a bus in a big city for decades. As a committee, we need to seriously consider the fact that more than 16,000 people have done such jobs and fulfilled their end of the bargain but some of them are not entitled to the State pension. The future and the entitlements of those men and women are at stake here so this is a very serious issue and serious business. I want us to nail this matter down at the end of this meeting. I formally propose that the committee support the call for CIÉ to pay for independent legal advice to be given to the unions that represent staff members. The request is modest and reasonable in the light of what has happened and what is at stake. The committee should unanimously endorse the call.

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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Hear, hear.

Photo of Mick BarryMick Barry (Cork North Central, Solidarity)
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I also ask that the Minister for Transport, Tourism and Sport support the call. That is the least that can be done here.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I call our guests again.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Can I comment later?

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Yes. I propose that we take questions from two members at a time. I urge members to avoid interrupting. I assure members that they will all get the chance to comment.

Mr. Dermot O'Leary:

Shall I answer the few questions that were asked by Deputy Munster?

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I propose that we keep going.

Mr. Dermot O'Leary:

I agree with the Vice Chairman.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I call Mr. Gill.

Mr. Ronan Gill:

My colleague, Mr. Carlyle, will respond to the issues that Deputy Munster raised about the 2009 document and its provenance.

Mr. Declan Carlyle:

I shall start by referring the Deputy to the replies to the parliamentary questions that were tabled by CIÉ employees, points Nos. 2 and 4, which deal with exactly what happened in 1994, where benefit improvements were provided as well as the benefits to CIÉ at the time, and the mechanism for setting out the future funding of the schemes was agreed. That agreement was provided for in statutory instruments that were signed in 2000 and that were retrospective to 1994. We all agree that the statutory agreements have not changed since that date. They provide information on how CIÉ is required to fund these schemes. The statutory instruments have not changed.

In terms of what happened in 2009, I am familiar with the document, particularly if it is the one I think it is. I have not seen a copy of it this morning. In 2009, volumes of documentation and position papers were put to the CIÉ board by the management team. All of the documentation has been supplied to the worker directors, as requested by them, in terms of 1994, 2009 and 2013, so CIÉ is not hiding from anything.

I ask people to cast their minds back to 2009. It was a time when CIÉ's passenger revenue and subventions were in decline and the country was in crisis. The position paper, if it is the one that I understand it to be, was a position put to the board on its obligations under the statutory instruments to pay 3.6 times and 2.7 times employee contributions. That was the obligation of CIÉ and it considered whether it could afford to pay 3.6 times and 2.7 times employee contributions. After that there were various conversations and submissions on what CIÉ would do.

In terms of the initial actuarial 2008 recommendation for 4.6 times and 3.3 times the employee contributions, the recommendation was based on the assumptions that prevailed in 2008 such as pay increases in the schemes and a pension increase for pensioners. At that stage, the board was considering cutting pay for actives at work and it had no intention of granting pension increases. Indeed, the State was considering cutting pensions for civil servants. The board reflected that situation and decided that CIÉ would not pay pension awards and increases. Subsequently, the actuary certified the effect of the required funding, which has been supplied in the documentation provided here in the replies to parliamentary questions. Last June, it was also supplied to the trade union group at the Workplace Relations Commission.

The funding level that CIÉ is required to put into the scheme is based on the actuarial advice to pay 2.8 times and 2.3 times the employee contributions. That has been funded since that time.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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I want to clarify a point about the 2009 document and the particular issue that we are discussing, of which Mr. Gill is unaware. Is Mr. Carlyle aware of the reference in that document?

Mr. Declan Carlyle:

I am.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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Has Mr. Carlyle read it?

Mr. Declan Carlyle:

I have read volumes of documents and position papers.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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Has he read the 2009 document? I understand that there would be volumes of documents.

Mr. Declan Carlyle:

Yes.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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Is Mr. Carlyle familiar with the 2009 document?

Mr. Declan Carlyle:

Yes. It is a position paper. At the time, it concerned the fact that the CIÉ board was considering not paying 3.6 times or 2.7 times employee contributions. That did not happen and other options were put on the table. Consideration of a contingent asset was discussed at the time.

In terms of the current offer at the Workplace Relations Commission, there is an undertaking that CIÉ would seek the use of a contingent asset in the resolution of the current situation. That is no different. These are position papers that were put to the board. Ultimately, the board decided not to grant pension increases. There were no pension pay awards until 2016. The actuary's recommendation, which is provided in the appendix to the replies given to parliamentary questions, confirms a required funding level of 2.8 times and 2.3 times employee contributions. At that time, there was considerable engagement with the trade union group. The CIÉ group recognises five unions. There are four worker directors and there is collective representation at all levels of the organisation. There was extensive engagement with the trade group at that time. Indeed, the trade union position was that when paid 3.6 times and 2.7 times employee contributions that perhaps, under a review, the trade union would consider CIÉ's request for a 30% increase in its contribution.

That is confirmation that CIÉ's position, in the past two years regarding a review being required if those contributions are exceeded, was accepted by the trade union group between 2009 and 2013. There was no recommendation from an actuary to CIÉ to pay 3.6 times or 2.7 times. Accordingly, a review did not arise.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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Even regarding the position paper, would CIÉ not have engaged with the unions?

Mr. Declan Carlyle:

There were various options in that position paper.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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Was the Minister made aware of them?

Mr. Declan Carlyle:

There was no final decision made on that position paper.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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Normally, a position paper provides the basis for discussions.

Mr. Declan Carlyle:

I do not see it as an explosive document at all. It was one of a kind of many being considered by the board at that time. We were in a situation where the country was in crisis. How could the company manage its pension costs while its revenues fell and its subventions were cut by the State, like with other essential services? Ultimately, the recommendation from the actuary was 2.8 and 2.3 times. That was adhered to.

In 2013, when there was a submission on funding proposals, the trade unions rejected the requests to increase their contribution. The trade unions put the position to CIÉ at the time that when it put in 3.6 times and 2.7 times, they would consider an increase in their contribution under the review of the rules of the scheme. There was no recommendation to do so.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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Position papers are normally options to be considered. We know the board did not give the trade unions the options to be considered. Did it inform the Minister of the options to be considered?

Mr. Declan Carlyle:

There were volumes of position papers put to the board at that time. One of the options in that paper was an increase in employee contributions. That was rejected by the trade unions when they were engaged and negotiated with between 2009 and 2013.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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What options were provided to the trade unions?

Mr. Declan Carlyle:

There were numerous options, all of which were provided to the worker directors. Nothing was hidden or explosive. These were considerations put to the board as to how it would manage its funding costs. Ultimately, the recommendation by the actuary was 2.8 and 2.3. That was absolutely adhered to by CIÉ.

The funding proposal set down the contribution from CIÉ, which has been adhered to since 2013. In 2015, because of our FRS number reached astronomical levels of over €700 million, CIÉ invited in the trade union group to discuss what it saw as a potential difficulty with its schemes coming down the road. There was extensive engagement. There was a request for funding for advice sought by the trade union group. At the time it was provided by CIÉ at a cost €47,000. That advice has been referred to as an independent report. It was not as it was a trade union group report. It provided legal advice in itself to the trade union group. It is attached in appendices to our replies to parliamentary questions.

We subsequently debated that report at the Workplace Relations Commission, WRC. An element of that report was used as a foundation for the regular wages scheme pending proposal. That came from the trade union group to reflect the actual experience of the retirement age in the regular wages scheme. There was extensive engagement on that.

We then came back to the WRC where the trade union group was looking for further actuarial advice, having confirmed to CIÉ at the WRC that it had received its own legal advice. One of the unions told its own members in the previous December that it was getting legal advice. We were asked to fund actuarial advice for a UK actuary because Irish actuaries, including their own, had no standing as far as the trade union group was concerned. Ultimately, that was agreed. The UK actuaries then confirmed they would need an Irish actuary to corroborate anything they presented to the trade union group.

We returned to the WRC in October last year and agreed an initial amount of £30,000 would be provided to the trade union group to use for professional services. That is attached as an appendix to the company's replies to parliamentary questions. The £30,000 offer for further professional services, not only actuarial, remains available to the trade union group.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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Will Mr. Carlyle confirm that the then Minister was never given sight of the options in that position paper?

Mr. Declan Carlyle:

I was not there in 2009. I have read all those papers. There were large volumes of them. A position paper did not conclude that the board should not pay 3.6 or 2.6. The board engaged with the staff and the trade unions to negotiate a solution. Ultimately, when pay awards were not pensionable and no pension increases were granted, the certified statement from the actuary, which are included with the company's replies to parliamentary questions, stated they should 2.8 and 2.3 times, which are required under the statutory instruments which have not changed since 2004.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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Will Mr. Gill confirm if the options in the position paper were shown to the then Minister?

Mr. Ronan Gill:

The options would have been shown to the CIÉ board. There was engagement with the board and the actuaries. It would not have been required to be shown to the Minister.

Our position is that we are willing to support the trade union group in a conciliation process through the WRC, which would include the provision of professional and actuarial advice that is not limited to legal advice. This would get us to an agreed proposal which could be put to the scheme's trustees for submission to the Pensions Authority.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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Given that there has been little or no consultation with the trade unions up to now, is Mr. Gill saying future engagements will only be through the WRC?

Mr. Ronan Gill:

No.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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Will he give a commitment today that the unions will be at the table?

Mr. Ronan Gill:

On the question of whether there will be consultation, the guarantees I can give today are that CIÉ is committed to looking for agreement and will not change the schemes without agreement. CIÉ will continue to fund the schemes in accordance with the statutory instruments in that regard. We make our employer contributions to the schemes in accordance with the statutory instruments, acting on actuarial advice. We would welcome consultation-----

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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I did not use the word “consultation”. I used the word “engagement”. I see them as two different matters. Consultation involves putting options. Engagement involves discussing and coming to an agreement.

Mr. Ronan Gill:

My apologies to the Deputy. I fully agree with her. There was engagement in the WRC during the course of 2016 and 2017. We would welcome the opportunity to continue that engagement through the WRC.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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I am not getting a straight answer on this. It is quite frustrating. Is the only way CIÉ will engage with the unions through the WRC? Given the bad feeling that has come to pass over the lack of engagement, will Mr. Gill give a commitment today to engage with the trade unions outside of the WRC?

Mr. Declan Carlyle:

We have five recognised trade unions and collective agreements with each one, worker directors and well-established industrial relations machinery. In addition to that, and as a result of the recent request to the board, CIÉ indicated it is quite prepared to agree mutually with the trade union group on a body or a person to adjudicate on these past matters to establish the position. This has been laid out in the company's replies to parliamentary questions. This will enable us to move forward in the WRC and engage on negotiating, which we have been doing for the past two and a half years with the trade union group, a solution could then be presented to the trustees. Neither CIÉ nor the trade union group can present an outcome to the Pensions Authority. It must be the trustees.

To that end, we have said that we would have no difficulty, if we could not agree locally on a person with the necessary experience to adjudicate on these matters, with the WRC's director general appointing somebody. We already have indicated to the trade union group that we would be willing to participate in that process.

Photo of Mick BarryMick Barry (Cork North Central, Solidarity)
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I have a brief supplementary question. I have listened carefully to the points raised by Mr. Carlyle. The volume of correspondence on this issue is familiar. However, we are not talking about the volumes of correspondence. We are talking about this particular item of correspondence. I welcome that, while we were told previously it might be an extract from a CIÉ document, Mr. Carlyle has made it very clear that it is part of CIÉ documentation. That is positive and I welcome it.

He has indicated that he does not think it is explosive because it is merely a point on a position paper, etc. However, I put it to Mr. Carlyle that if it is a position paper, it is one which outlines a course of action that senior people in CIÉ at the time, at the very least, felt may have been in breach of CIÉ's legal obligations to its workforce. That is a big and a serious issue. It also does not explain Mr. Carlyle's unwillingness to fund independent legal opinion for the representatives of the CIÉ workers. A course of action has been pursued not over the past year or two years, but over the course of almost the past ten years. Flowing from that analysis, in that particular appendix, this indicates that Mr. Carlyle was not confident that it would stand up in a court of law. At the very least, CIÉ may be in breach of its legal obligations.

Mr. Gill was asked if he gave that position paper to the Minister. He replied by saying that he was not required to do so. That was not answering the question. He was asked if he gave it to the Minister. I would also like to know if the substance of it was discussed with the Minister or subsequent Ministers. I know what is required or not required. Was it given to the Minister or was it discussed with the Ministers?

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Briefly, Mr. Carlyle.

Mr. Declan Carlyle:

In respect of 2009, I have only briefly looked at the document. I would be familiar from the comments Mr. Ennis made and from the contents that it was a position paper on the possibility that if there was a recommendation of 3.6 times and 2.7 times, and if CIÉ did not contribute to that level, there would be a legal difficulty. I accept that. The statutory instruments require CIÉ to contribute to that level. Thereafter, a review would take place. No actuary's recommendation ultimately followed that position paper that required CIÉ to pay in excess of 2.8 times, which it has done. It is not explosive. It did not contravene the statutory instruments signed and in place since 2000 which reflected the 1994 agreement.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I call Mr. O'Leary, very briefly.

Mr. Dermot O'Leary:

I will defer to my colleague.

Mr. Greg Ennis:

Mr. Carlyle needs to read the document again. I refer to four brief extracts. The actuary in his report recommended that the board's contribution should be 4.6 times the members' contributions in the salaried scheme and 3.3 in the wages scheme. This is an increase from 2.8 and 2.3 respectively. To date, there is no record of the board having rejected any previous recommendations in respect of contribution rates by the actuary. Bearing in mind the board's responsibility is set out in the statutory-based rules, independent legal advice would suggest that it would be difficult for the board to ignore the advice recommended by the actuary unless there was some compelling reason to believe the actuary's recommendation was flawed.

It continues by saying that even if the legal advice is not as robust as stated, it is difficult to envisage how the board could renege on the requirements to at least pay contributions of up to 3.6 for the salary scheme and 2.6 for the wages scheme and hope that the members alone would pay the balance of 4.6 and 3.3. The final line refers to the recommendation and that the first year cash cost saving of adopting option C over the actuary's report would be in the order of €25 million.

Ten years later, do the mathematics. We have a massive abyss in these schemes. I am not even sure this document went to the board. However, I hear what is being said. If it has gone to the board, it has gone to the board. I did not believe that was the case. If it has gone to the board, I think that makes it worse. Where did it stop?

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I call Mr. Carlyle.

Mr. Declan Carlyle:

It completely ignores the fact of the actuary's report which has been supplied to the trade union group.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Very briefly.

Mr. Dermot O'Leary:

I will be as brief as I can. In respect of the comment made by Mr. Carlyle on the acknowledgement by the trade unions of SI 323/2000. We are very clear. I think the transparency and openness in this debate is one sided. The last interaction between Deputy Barry and the CIÉ group is telling. The only transparency is coming from the trade union side, to be fair. We have asked many questions.

I will try to condense it. Deputy Munster asked me a couple of questions. I wrote down some of them. In respect of the Waterford Crystal piece, the Deputy is correct that 1,500 people were involved. It cost the State a significant amount of money to repair that. It did not go fully towards repairing it. I think the figures are approaching €200 million for that particular item. Ironically, one of the actuaries advising the trade union group was central to that Waterford Crystal case all the way to the European Court of Justice. It cost the State a lot of money for 1,500 never mind 16,000. There is a relevance there.

I am sorry I have to repeat this, but there is a caveat of the legal advice which is central to all this. I conscious in answering further questions that unless we get that legal advice we cannot act on anything. Senator Feighan, and his colleague, Deputy Rock, who has just left, need to be clear and to understand that no one is here, on the workers' side, looking for a bailout. That is not what this is about. The schemes here are still open and alive. I said this already, but relaxing the requirement to match liabilities with investments in Government bonds would make a significant difference to the deficits.

In respect of the core issues, I refer, briefly, to a letter I wrote that goes to the heart of the issues on which the three trade unions have been responding to questions. What we said was that it was imperative that all the concerns that have surfaced and been ventilated will be addressed, whether they revolve around the 1994 piece, where the five schemes morphed into two, the alleged guarantees, the contribution piece or SI 205/2010 and SI 323/2000. The central tenet here is that the contributions that were suggested and recommended by the actuaries were not acted upon by the CIÉ board. We know they were not acted up by the CIÉ board and that left a shortfall in both schemes. Those are the kernels of the issues here. Unless we get clarity and transparency around those issues, we are at nothing.

In respect of the Workplace Relations Commission, WRC, I repeat that we have no objection. We do our best business, if I can put it that way, at that body. However, the people who practice industrial relations regularly, which we do on this side of the table, know it is a very fluid science. Some of the stuff at the heart of this, and we have been mentioning it ad infinitumat this stage, is rigid. It is covered by law, statutory instruments and legislation. Unless we get sight of what is under that, whether it is a document that has status or not, independent of the company, then this issue will not be resolved. There are 16,000 people involved. It is a significant issue. Unless that happens we are at nothing here.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I call Mr. Ennis.

(Interruptions).

Photo of Frank FeighanFrank Feighan (Fine Gael)
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I want to clarify something.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I call Mr. Ennis.

Photo of Frank FeighanFrank Feighan (Fine Gael)
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Can I clarify something?

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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The Senator can come back in shortly.

Photo of Frank FeighanFrank Feighan (Fine Gael)
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I have to go to the Seanad. I am here since 9.30 a.m. I am here two hours and I have to go to the Seanad, if that is possible.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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I have not had an opportunity-----

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I know, Deputy.

Photo of Frank FeighanFrank Feighan (Fine Gael)
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Hang on a second, Chair. It is not a bailout but where will the money come from?

Mr. Greg Ennis:

What should have been put in was not. It is a bit ironic that, of the 100 plus schemes not covered by the minimum funding standard, the National Transport Authority is one of them, if I am not mistaken. We are debating something about the minimum funding standard and the difficulty our schemes are in. At the end of the day, if Senator Feighan has to go to the Seanad, that is his business. However, I think this is very important. There are 16,000 people affected by this.

Photo of Frank FeighanFrank Feighan (Fine Gael)
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I have been here since 9.30 a.m. and everyone is coming and going. I will be back in five minutes.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Is Mr. Ennis finished?

Mr. Greg Ennis:

Yes, I am.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I call Mr. Cortes.

Mr. Manuel Cortes:

Deputy Munster, who is not present, raised the question of why the company has not yet given a guarantee that it will fund independent legal advice, even though it has this morning repeatedly been asked to do so. It is refusing because it knows it is on shaky ground and such advice may support the contention that the company has been flouting legal instruments, as the unions have been contending throughout the process. The company keeps repeating the £30,000 amount but that may not be sufficient to fund the legal advice we seek. It might be worthwhile to ask the company's representatives if they can give us the categoric assurance we seek. If that is forthcoming, we will engage in talks with the management, but if it is not, we will not do so. There is no way around that impasse without a categoric assurance from the company that it will pay for the independent legal advice. It is to be hoped its representatives will provide such before the committee today.

We have a serious difficulty in regard to the issue raised by Mr. O'Leary regarding the Pensions Authority and that may be cause for another meeting of the committee. The company is comparing apples with oranges in that regard and is putting restrictions on our scheme, which is open and operates under statute as opposed to a closed scheme without statutory obligations. One cannot compare apples with oranges. One of the requirements they are imposing on us makes no sense because the scheme is open and there are big cashflows coming in through member and employer contributions on a regular basis. There is no chance or fear that pensions will not be paid out from the scheme but limiting our investment decisions that will better serve the interest of people who are paying in today to just bonds makes the scheme more expensive. It is nonsensical that regulations brought in to protect people's pensions are undermining those pensions. However, that may be a subject for another inquiry.

My colleague, Mr. Terence Ahern, will address the question of what happened in 2013.

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.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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May we have a copy of that letter and the other document to which Mr. Ahern referred?

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I call Deputy Catherine Murphy.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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I apologise as I will have to leave to speak in the Dáil.

I have a couple of questions, but I will begin by making a few points. I accept that this is different, in that it is a statutory scheme, but let us look at it from a pensioner's perspective. Certainty about the future is something that people spend their whole lives trying to achieve, but there is a point at which it becomes too late to do that if something interjects. For some people, in particular those with a total reliance on the CIÉ pension, a significant issue arises. That has been made even worse by some of the changes to the social welfare legislation that were enacted in 2012 and 2013 and reduced people's entitlement to full pensions unless they fulfilled certain criteria. We must acknowledge that this is a serious issue for people living in poverty.

Discussions on this matter often come across as being very academic, so an indication of exactly what kind of money people would exist on - there are various grades, of course - if they were exclusively reliant on a full pension from CIÉ would be useful. It is a sizable set of schemes at 16,000 people, for whom this is critical.

I will pick up on the point that was made about two parties signing up. Regarding whether the 1951 pension scheme was fully complied with in terms of what was submitted to the Pensions Authority in 2013, was any CIÉ board member who is currently on the 1951 scheme committee also a member of that committee in 2013 or has its membership changed totally? Has there been some crossover?

Regarding independent legal opinion, a figure of £30,000 was mentioned. How much would be required? Knowing whether the £30,000 would be sufficient would be useful. Are strings attached to the £30,000? If its provision is contingent on something being done in return for it, that is a different proposition.

I would like to hear the other side's response to my next point. It has been stated that the employees rejected an increase in their contributions. Just as it was a hard time for legal entities like the CIÉ board, it was a tough time for individuals who had significant additional costs imposed on them. It might be useful to hear whether there were other reasons for the unions to take that decision. We need a balanced understanding of the situation.

Obviously, the legal advice has to be independent. Essentially, we are discussing freeing up money to get legal advice as opposed to the advice being commissioned by CIÉ, given that the latter would raise issues of privilege and so on. What advice is being sought? There are large amounts of documentation, primary legislation and secondary legislation. Is the advice focused on that aspect or does it need to be wider? Have the trustees commissioned any legal advice? I presume that option is open to them. Is there the funding capacity to commission that advice?

Photo of Mick BarryMick Barry (Cork North Central, Solidarity)
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I have spoken to the Chair about how I must leave to attend the Dáil in a few minutes, so I will be brief.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Yes.

Photo of Mick BarryMick Barry (Cork North Central, Solidarity)
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I have submitted a motion to the Vice Chairman, which states: "This committee calls on the CIÉ board to fund an independent legal opinion for the CIÉ workers on issues relating to their pension schemes prior to any WRC hearing." I have received a note from the clerk to the committee saying that, although we do not take motions without notice, we can write to the Minister expressing the sentiments of the committee if the committee agrees to that proposal. I accept that note in good faith and I propose that we write to the Minister. I might then submit a motion for the next meeting to make that a formal position of the committee. Can I have agreement on that?

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Is that agreed? Agreed. I thank members.

Mr. Declan Carlyle:

May I speak on Deputy Murphy's comments? She posed questions to CIÉ and my colleagues, but I will respond as well. CIÉ's concern is with current staff and pensioners. Thankfully, pensioners are protected by the legislation. CIÉ's initiative in 2015 was driven by its concern around the long-term viability of the schemes and the volatility of investments, returns and so on that was putting pressure on them. As such, we agree with the Deputy on the concerns about future pension entitlements.

Since 2000, the 1994 agreement has provided more than €200 million in additional contributions to the 1951 scheme and more than €100 million to the regular wages scheme. There has been more than €200 million extra from the single matching contribution, which was judged to be a requirement in 1994. That is substantial support for the two schemes from CIÉ.

There are no strings attached to the independent legal advice within the company's reply to parliamentary questions. The letter of engagement that was agreed between the parties at the WRC is there. The only condition we required was that the report would be presented jointly at the WRC to all of the trade union groups and CIÉ. There was no other condition on the £30,000 for the initial report. That remains available.

Regarding the funding proposal that was submitted in 2013, my colleague, Mr. Ahern, referred to the signatory. At the time, that was the chairman of the 1951 scheme. As we have set out in our replies, that committee has unique powers. The legal advice provided to the trustees is that their committee is the body responsible for the funding proposal. Its chairman signed the proposal. Unfortunately, he used his wrong title but the committee, of which he is chairman, is the trustee for the purposes of the scheme.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Did the submission adhere to the legal requirements?

Mr. Declan Carlyle:

It has been stated that there was no engagement with the trade union, but there was. Under the legal requirements, the submission was signed by the committee as the trustee, by the sponsoring employer and by the actuary, who was required to sign it as well. It complied with the legal requirements. There are various narratives to the effect that there is a requirement for engagement and agreement with the union for a submission to be legal, but that is not the case. It may be preferable, but it is not the case.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I will allow a brief comment from Mr. Ahern.

Mr. Terence Ahern:

I will throw some additional light on the matter of independent legal advice that was raised by Deputy Murphy. Since the recent election of the four employee members of the 1951 pension committee, we have requested funding for independent legal advice from the scheme's secretary. That was denied. We then made an application to the-----

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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When was that?

Mr. Terence Ahern:

In the past four weeks.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Why was it declined? Was a reason given?

Mr. Terence Ahern:

Not really. We took the request to the CIÉ board. At its meeting of 21 February, it passed the matter to the CIÉ executive. I have a letter dated 27 February from Mr. Carlyle addressed to me. It asked me to note something further to Ms Finucane's letter to me of 22 February.

It states that CIÉ has considered this request for funding for independent legal advice and decided not to grant it. It is signed "Yours sincerely, Mr. Carlyle".

Mr. Declan Carlyle:

Deputy Murphy asked me about the level of benefits provided in the scheme. In appendix 1 of the company's reply to the parliamentary question, the level of benefits provided can be seen. There was a reference earlier to the McCarthy report which has some interesting things to say about CIÉ and the use of its assets, by the way. There was a table of salary and pension contributions laid out in the report, which did not pass any comment on it, although it did so in relation to other organisations. The level of benefits is in some ways skewed in the 1951 scheme by the social welfare offset by 1,000 members, approximately €24,000. There are 1,000 D class members in there with no offset and there are 1,000 members with a €24,000 offset. The resulting pensionable salary is, on average, €58,000. One can see that if one takes out the 1,000 by €24,000, the pensionable salary for the 1,000 D class members is substantially higher. The level of benefit provided in each scheme is, in any event, set out in appendix 1.

I refer to the request by Mr. Ahern as a member. I am also a member of the 1951 committee. It is one committee, not two. That committee has the unique power as trustee to get its own legal advice, etc. Unfortunately, the recently elected members have not attended the meetings scheduled by the secretary. That is a matter which could be dealt with by the committee which has the power and, as CIÉ notes, has commissioned its own legal advice in the past. There are not two committees. It is not the four elected members and the four board members. There is one committee.

Mr. Dermot O'Leary:

I have a brief response for Deputy Murphy who will not be surprised to hear that it is very hard to measure the cost of legal advice, although I understand that the Minister for Transport, Tourism and Sport, such as he is, is an expert on the legal profession. Perhaps, he would have an idea of how much it would cost and write a cheque based on his knowledge.

Of course, certainty around pensions is a priority. That includes the 1,000 who are completely reliant on the CIÉ pension fund for their pension into retirement. It is of paramount importance to all the trade unions that all members, both active who are in payment and deferred, are looked after and have that certainty. However, I repeat what I said earlier. We can only resolve a problem which has been clearly identified. That is the problem here. The problem has not been clearly identified. That is the issue coming back to the legal advice.

On balance, I refer Deputy Murphy to our submission where we lay out the balance the Deputy seeks. The reason the increase in contributions was refused by the trade unions at the time was because the company had not met its obligations under SI 323 of 2000. That is a fact.

I will make one last point about costs. The members should note that CIÉ pays approximately €5 million to its actuary every year. It is not a sum to be sneered at. It also pays out €1.5 million in administration. It is a total cost of €6.5 million. For the trade unions to seek independent legal advice, expensive as it might be, would not cost anything like that.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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I know with legal advice that it is like asking how long is a piece of string. Clearly, it is necessary to narrow down what-----

Mr. Dermot O'Leary:

I said at the outset that we were not experts on pensions. There are also many people out there who will offer opinions on pensions, but there are not a lot of people in the State with the expertise associated with statutory instruments and pensions.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Have the unions scoped out what is needed?

Mr. Greg Ennis:

I understand that there are only three or four barristers who are on top of this business. To get opinions on five or six issues could cost €10,000. It depends on the consultations. The point about the length of a piece of string is correct. As to scoping out, there are a number of things we would look for. We would look for the contribution rates and the statutory instruments governing the schemes, the legality of the CIÉ pensions rationalisation agreement of 1994, the legal significance of the Omega Pharma case and its potential implications on this, potential conflicts of interest, and the 2009 document contained in appendix 1 of my submission. We would like to have all of those perused. That is by way of starters and my colleagues may have other issues they would want to add to the list, but they are, at least, core issues.

This is a situation in which, without a by your leave to the trade union group, proposals were put to the Pensions Authority in 2013 which do not include pay increases. As such, this problem is going to get worse. The second point is that for some reason which is unknown to us, the 2009 recommendations of the actuary with regard to what was needed were not delivered on. We argue that they were in compliance from 1994 right up to 2009 and then, all of a sudden, they said they would not put in the amount of money the actuary recommended was required. We have now been ten years without that contribution and the hole is getting bigger. Pensioners have a legitimate and reasonable expectation according to CIÉ itself, as in my appendix 1, to see pay parity and pensions in payment increase over time. They have not had that for ten years. We have the 900 or so people in the 1951 scheme who have no other income on retirement except this. It is a critical issue.

Mr. Terence Ahern:

It is important to repeat that contributions to pension schemes to meet the funding standard do not have to be cashflow contributions. They do not have to be liquid cash. It is not necessary to put cash on the table. It can be done by way of surplus assets which are not required for operations, in particular surplus property assets. Anyone keeping an eye on the property pages of national newspapers will be aware that CIÉ has gone to the market looking for developer agreements for property sites in Dublin, Galway, Cork and Limerick. These are surplus assets which are not required for operations and that is permitted by the Pension Authority. When we talk about contributions, it is important to be clear that we are not talking about cash. It can be budget or cashflow neutral. A very important detail about contingent assets is that they do not have to be sold. Some legal charge would be put on them but as a scheme recovers, they can be returned to the employer. They do not have to be sold. Likewise with unsecured undertakings, such undertakings can be revoked and returned to the employer according as schemes recover.

Mr. Ronan Gill:

There are differences of interpretation of fact between ourselves and our trade union colleagues. We have believed that the right way to deal with this is to get an agreement on the facts. There is a proposal that some independent person would arbitrate in that regard and we are willing to support it. If we cannot agree directly with the trade unions, we suggest that be done through a nomination by the Workplace Relations Commission. That may be a way the scope of whatever further legal reviews are required could be determined. We have a commitment that is sitting before the Workplace Relations Commission since last October to fund independent advice for the trade union group. Our policy has been to look for agreement, work our way through the process within the Workplace Relations Commission and, in the meantime, fund the schemes in accordance with the statutory instruments, acting on actuarial advice.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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The union had indicated clarification on that. Can we get that please?

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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We will get it. I have to be fair to all the speakers.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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Relax.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I will go to Mr. O'Leary next and we will go around. I have to be fair to give everyone a chance.

Mr. Dermot O'Leary:

I am happy with my contribution in terms of time. I am not complaining about that at all, in fairness. I have overstayed as usual. I heard what Mr. Gill said and we are back to the WRC again. We have asked for specific independent legal advice. We all know what "independent" means. We do not know what it is going to cost. If we did, we would have it out there publicly. The bottom line is whether someone is seriously going to consider a situation in which the country's transport system could grind to a halt on the basis that someone did not want to fund legal advice. Are we seriously talking about the three CIÉ companies being in dispute sometime soon because someone will make a decision behind our backs again on the basis that they will not provide legal advice? That is the reality of it.

Mr. Greg Ennis:

To bring some clarity to what has been said by Mr. Gill on the £30,000 or €30,000, we understand that was for actuarial advice. It is not for legal advice. We are gone beyond playing with words now. This is too serious.

Mr. Ronan Gill:

With respect to my colleague, I point to the document which says it is for advice, including advice related to the regulatory and legal framework. It is not restricted to actuarial advice.

It is crafted-----

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Mr. Gill is stating clearly on the record here-----

Mr. Ronan Gill:

On the record-----

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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------that the allocation of €30,000 may not be enough and that it is entirely up to the trade union group-----

Mr. Ronan Gill:

To scope out-----

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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-----to decide where it is required to be spent. Is that what Mr. Gill is saying?

Mr. Dermot O'Leary:

I was one of the parties at the Workplace Relations Commission. This is very important.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I know, but I must be fair to everyone.

Mr. Dermot O'Leary:

I want to be very clear about this from my perspective, and my colleagues share this view. The €30,000 was allocated for actuarial advice. Over recent weeks that has morphed into regulatory and legal advice but the allocation was for actuarial advice. We are looking for independent legal advice.

Mr. Manuel Cortes:

We have all been crystal clear that if that is not forthcoming, there will be no talks. Therefore, what the company is saying is fantasy land. There will be no engagement unless we get that independent legal advice.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Right. I call Mr. Cotter.

Mr. Emmet Cotter:

I wish to advise the committee what exactly was at play here. On 24 August, the head of group human resources in CIÉ wrote to the trade union group, TUG, and I agree wholeheartedly with Mr. O'Leary on this, seeking to impose a financial cap to cover any and all actuarial or other professional advice sought by the TUG from 24 August 2017. However, the important point is that this financial cap was slightly less than the sum required for the external actuarial advice, a financial estimate of which had been communicated to CIÉ the same day by the independent actuary. Effectively, the proposed financial cap would have ensured there was no financial commitment by CIÉ to fund an independent legal opinion or any legal advice and it stymied any such opportunity. Very cleverly, it was put in the same day as the company received the estimate. I have seen the estimate for the actuarial advice and it was an amount in sterling excluding VAT, and CIÉ came back a few hours later with that same amount in euro to cover all actuarial and other professional advice. Essentially, CIÉ in the one day closed the door by ensuring that the sum that was on offer could only be used or gobbled up to pay for the preliminary actuarial advice. Mr. O'Leary has nailed that point. I am merely giving the detail of what happened.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Do members have further questions? I note Senator Craughwell indicated. Is his question on the same issue?

Photo of Gerard CraughwellGerard Craughwell (Independent)
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I am not a member of the committee.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I know, but does the Senator have a question related to that issue?

Photo of Gerard CraughwellGerard Craughwell (Independent)
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It relates to pensions in general.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I want to bring in Mr. Gill.

Photo of Gerard CraughwellGerard Craughwell (Independent)
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That is fine.

Mr. Ronan Gill:

The principle of CIÉ funding advice is established in a letter where it primarily focuses on actuarial advice but also covers off regulatory and other legal advice. Therefore, the principle is established that we would fund the advice of the trade union group through the process in the Workplace Relations Commission. CIÉ is not hung up on the WRC because there is a later proposal that there would be a forum to discuss the facts that are at issue here. We are amenable to agreeing with the trade union group on who would chair and determine that, and if we could not agree that, we suggested that it would go back to the WRC which would then determine who might chair that process. It is important for the record that I say that CIÉ has said that it will fund the advice required by the trade union group, and that continues to be the position.

A Speaker:

That is a very different statement that Mr. Gill has just made.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Right.

Photo of Frank FeighanFrank Feighan (Fine Gael)
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I have been here since 9.30 a.m. and it is interesting to hear all the various views. This committee does not have the expertise of the Workplace Relations Commission. Did I hear crystal clear that the national transport system could grind to a halt because of a difference of €30,000 or €40,000? Is that what I am hearing because we have been talking about the figure of €30,000?

Mr. Dermot O'Leary:

I asked whether somebody is seriously considering a situation where the transport system of this country would grind to a halt because somebody is going to impose changes to the pensions scheme and to the pensions of people that we represent.

Photo of Frank FeighanFrank Feighan (Fine Gael)
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I understand that. We have been talking for the past half an hour to an hour about a difference €30,000.

Mr. Dermot O'Leary:

With respect, we have not.

Photo of Frank FeighanFrank Feighan (Fine Gael)
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If not, what have we been talking about for the past hour?

Mr. Dermot O'Leary:

We we have been talking for the past two hours about the fact that we cannot get independent legal advice funded by the CIÉ group. That is what we need.

Photo of Frank FeighanFrank Feighan (Fine Gael)
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Exactly. We agree on that.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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We have been talking about the figure of €30,000 for the past half hour with respect to the various people involved. Do members have any further questions? I call Senator Craughwell and I ask him to be brief.

Photo of Gerard CraughwellGerard Craughwell (Independent)
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As the witnesses are appearing before the committee, I wanted to get clarity regarding public service pensions in general and particularly the witnesses' pension issue. Regarding deficits that have occurred in pension schemes, which is happening across the public service, we find that pension promises that were made can no longer be met because of failures within the organisations to meet those pension schemes. Yet, when I consider the body politic, we do not let our pension schemes suffer. If a deficit has arisen in pension schemes in the transport area, it can only be due to the fact that the moneys that should have gone into the pension schemes were used to keep the organisation's day-to-day operations running. It is the workers who have been driving buses and trains and doing other tasks and who expected to receive their pensions who have been subventing the organisation to keep it running. We now find those workers do not have the promise of the pensions they expected when they took on their jobs. Is that the way the witnesses view this?

Mr. Dermot O'Leary:

The Senator has hit the nail on the head. As my colleague, Greg Ennis, said earlier, during the Bus Éireann dispute last year, and we have repeatedly said this, the workers in CIÉ have been subsidising their own jobs and pensions for many years. The Senator was correct in saying that. The pensions to which the Senator referred, including those of the Members of these Houses, are unfunded as opposed to this pension scheme. This is treated as a private pension. It is covered by statutory instruments and has the same statutory basis as that of a public sector pension. I cannot argue with what the Senator said. It is a fact that the moneys that should have gone into the CIÉ pension scheme were diverted elsewhere, namely, to provide public transport. Of that there is no doubt.

Mr. Declan Carlyle:

A lot is turning on the reference to the actuary's recommendation or with respect to the workers subventing CIÉ's operations. That could not be further from the truth. CIÉ, like all other organisations, went through a very difficult period from 2009 onwards. The way CIÉ handled those difficulties is to be commended. Not one single person was made redundant other than through voluntary means. Exceptional efforts were made by the company to get through those difficult times.

With respect to the recommendations of the actuary, and this point needs to be taken on board, appendix 3 in the company's replies to parliamentary questions sets out clearly and refers to the document, to which I believe Mr. Ennis referred. It sets out the three options, so there no secret here nor any explosive document. It is referred to in the company's submission with respect to the options the board faced at the time. The actuary sets out in the introduction the background to the recommendation concerning the 4.6 and 3.3 times contributions. If those actuarial recommendations had stood, we know from the board's papers that were discovered by the worker directors that the trade union group at the time accepted there would be a review if the contributions went above 3.6 and 2.7 times contributions. That is in the board papers. If that actuarial recommendation had stood, there would have been a review of the board's contribution and the member's contribution.

Since 2000, more than €300 million in excess of the matching of the members' contributions has gone into these two schemes. One could not then state that the workers have been subventing CIÉ's operations. There would have been a review if that recommendation had stood. Where that review would have taken us at the time, nobody knows, but there would have been one. That is required by the statutory instruments. That recommendation was replaced and that is confirmed. There was a signed actuarial statement by the actuaries at the time that with no pension increases and no salary increases, which there were not in any event, all that was required were 2.8 and 2.3 times contributions. It refers to the document which I believe is the document to which Mr. Ennis referred. There is nothing explosive about this.

Photo of Gerard CraughwellGerard Craughwell (Independent)
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May I come back in on one point?

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Mr. Cortes wishes to make a comment.

Mr. Manual Cortes:

We could go around and continue to dwell on the past but that will not change where we are. We are at an impasse. The unions have been very clear this morning that to break that impasse we need an independent legal opinion to be funded. If the CIÉ group were to give that commitment here and now, we could break the impasse and could start talking again. It is simple; it is not rocket science. However, unfortunately, all I am hearing from the CIÉ group is more and more excuses about how we got here. We need to move forward and not look backwards.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I call Deputy Catherine Murphy.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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There was a question I asked and I just want to get an answer. Were current board-appointed members of the 1951 pension scheme the same now as they were in 2013?

Mr. Declan Carlyle:

If the Deputy is asking about the board-appointed members to the committee, the answer is "No". There are two board-appointed members of the committee who are new to the committee since 2013. I am one of them.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Who is the other one?

Mr. Declan Carlyle:

It is Mr. Masterson, the director of human resources in Irish Rail.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Why did the board refuse to fund legal advice for the pensions committee?

Mr. Declan Carlyle:

The four members of the committee wrote to CIÉ seeking funding for legal advice. The committee - as I said earlier, there is only one committee - has the ability to commission legal advice if it chooses to do so.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Mr. Carlyle is on the board-----

Mr. Declan Carlyle:

I am on the committee, not on the board.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Sorry. It is the board that makes that decision. Mr. Carlyle is telling me it made that decision on the basis that the committee can seek that legal opinion itself.

Mr. Declan Carlyle:

Correct.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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It sought that legal opinion and it was refused.

Mr. Terence Ahern:

The four elected members of the 1951 pension committee, who represent the membership as the beneficial owners of the pension scheme, sought funding for independent legal advice before the first committee meeting. Not least because the committee agenda includes the revised funding proposals 2017, given that we already have serious questions about the 2013 funding proposal that was submitted without the agreement of the TUG, and so great were our concerns that we felt it was incumbent on us to get legal advice before we went into that first meeting.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Was there support from anybody other than the four-----

Mr. Terence Ahern:

Absolutely, in the middle of last year perhaps 50% of the members wrote into the company. We have the support of our trade unions, the TSSA and SIPTU. The four elected members are in agreement. It is not just one of us making this request. We represent the membership as the beneficial owners.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Was the assessment that they required legal advice as well as actuarial advice?

Mr. Terence Ahern:

Primarily we required independent legal advice.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Why did they make that assessment?

Mr. Terence Ahern:

It was because of all the concerns we had over the governance of the scheme in recent years, including the funding plan submitted five years ago in 2013.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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This is the committee that looks after the pensions of all the schemes.

Mr. Terence Ahern:

The pensions committee looks after the administration, which is separate from the trustees of the 1951 pension scheme. It is worth noting that the CIÉ board has dominant control over the governance structure of the 1951 pension scheme. For instance, the trustees are nominated by the board and appointed by the board with the agreement of the Minister. The committee comprises eight members: four elected by the employees and four nominated by the board. However, there are eight members with nine votes because the chair has an extra casting vote and the chair must be one of the board appointees, meaning that the board has a majority.

The board has dominant control over the governance structure. It appoints the trustees and the pension committee. It also appoints the secretary, the actuary and the legal advice. Many of the members of the pension scheme feel we are second-class citizens in our own pension scheme, which is regrettable.

Photo of Gerard CraughwellGerard Craughwell (Independent)
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Chairman-----

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Very briefly.

Photo of Gerard CraughwellGerard Craughwell (Independent)
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If this were a private company quoted on the Stock Exchange and profits were not going right, the board would be replaced by the shareholders. I agree with Mr. O'Leary that statutory instruments are involved in this pension scheme which makes it a public pension scheme as far as I am concerned. If there are problems there, why are the workers paying? Why does the worker always carry the can? We saw this recently in Aer Lingus and this is the reason I came to this meeting.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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The Senator is rehearsing what has already been said. We have been here since 9.30.

Photo of Gerard CraughwellGerard Craughwell (Independent)
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I am sorry. I arrived in late. I was at something else.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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In fairness to all the members who have been here-----

Photo of Gerard CraughwellGerard Craughwell (Independent)
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The three options on the table are brutal for workers.

Mr. Dermot O'Leary:

There is one response to that. Mr. Carlyle denies that workers have been subsidising public transport for many years. Mr. Carlyle is very much a recent entry into the public transport system in this country. I can assure Mr. Carlyle that for many years all the trade unions represented in this room have been campaigning strongly over the extent to which we have been subventing public transport.

Photo of Gerard CraughwellGerard Craughwell (Independent)
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The evidence is there.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Can anybody quantify how much the independent legal advice might cost?

Mr. Dermot O'Leary:

I had this discussion with Deputy Murphy.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I know. Somebody mentioned that a senior counsel could cost €10,000 for a day.

Mr. Dermot O'Leary:

How long is a piece of string? The answer has been given already. The elephant in the room is that that has to happen. There was a call earlier for an independent legal inquiry.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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Could the unions scope out what is required? Some of it has been done already. We need an estimate of what is required. That would be helpful to us.

Mr. Ronan Gill:

CIÉ is happy to engage with the trade union group to move this forward. Regarding the point made by my colleague, Mr. Ahern, as a matter of trust law, the committee members, when they act together, act in the interest of the membership. They are required collectively to act in the interest of the membership. It may be seen as a very fine point, but individual members of the committee should bring their concerns to the committee and the committee can consider them. It has its own resources to fund its own independent advice.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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We have heard about the power imbalance there.

Mr. Ronan Gill:

With respect, the employer-nominated representatives on the committee act solely in the interest of the membership while they are acting on the committee. It is not unusual for the employer to have a controlling say on the funding of pensions because ultimately the employer will pay the bulk of the cost. In this case the employer is currently putting of the order of €50 million into the scheme and I believe the employees are putting in approximately €15 million.

Mr. Declan Carlyle:

Yes.

Mr. Greg Ennis:

I wish to correct the record for Deputy Murphy's benefit. She was told that the same four board-appointed committee members have been in situsince 2013. That is not correct.

Mr. Declan Carlyle:

I said there were two new board-appointed members of the committee.

Mr. Greg Ennis:

When were they appointed?

Mr. Declan Carlyle:

Both Mr. Masterson and I were appointed in 2016. That is what I said.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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When the request for funding for independent legal advice was refused in recent weeks, as outlined in the letter that was mentioned, am I right in saying the reason given was that the committee had its own resources? Did the committee make the decision to refuse it on the basis that it had its own resources? If the committee has its own resources, what mechanism is open to the committee if it has a four-four split with one having a casting vote? I know from being on strategic policy groups and local authorities that the chair has a deciding vote. In my experience the chair rarely votes in favour of the request and generally backs the local authority and in this case the CIÉ group. What mechanism exists to get that funding if they are going to be blocked at every turn and it is rigged in favour of the group?

Mr. Declan Carlyle:

I would not agree that it is rigged in our favour. Mr. Gill has pointed out that most schemes have a dominant employer position because they are putting in, as in this case-----

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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Yes, but what mechanism is open now? What we want now is to secure the funding for the free legal advice.

Mr. Declan Carlyle:

I will try to deal with that.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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How do we do that?

Mr. Declan Carlyle:

Unlike other schemes that have those dominant employer positions, this scheme also has a requirement for the committee or trustees to get whatever they wish to do legislated for by way of a statutory instrument requiring the signature of a Minister and a consultation process thereafter. That is not present in private schemes where a trustee is present. It is an additional safeguard for the members of the scheme which is not in private schemes. The four elected committee members, without being provocative, have no standing other than being four employees. There is one committee of eight people who will act in the best interest of the beneficiaries of the scheme. That is what they do. They have powers that are unique, as we said earlier. If the elected members attended a committee meeting, their request for legal advice could be put to that committee and the committee could decide it. We cannot speak for what that committee will do even though I am a member along with Terence Ahern and Emmet Cotter. However, that is the proper place to process a request for legal advice. That committee has the power to commission that advice if it decides to do so.

Mr. Emmet Cotter:

There is a core issue that has to be fleshed out here as to why our concerns are so grave with regard to the governance of the 1951 scheme. When the committee was fully functioning with eight people in August and September of 2017, it was asked to confirm that it had adhered to all its legal requirements pursuant to Statutory Instrument No. 353 of 1951, not least sections 15 and 16. I can cite the document, but basically those two sections require all pertinent information for consideration to be brought before the committee. These questions were asked in the context of the 2013 funding proposal and the submission of the funding proposal to the Pensions Authority. To date, we still have not received an answer to what is a very fundamental and basic legal question. In layman's terms, we are asking the committee, and I accept the differentiation between the CIÉ board as the employer and the committee, to confirm that it complied with all its legal requirements. These questions were asked as far back as August and September last year, but to date it has failed to answer them. There is an ethical issue here for the four newly elected members. In CIÉ's replies to the parliamentary questions it states that the questions were replied to, and technically it is correct. However, it did not answer the questions. There were responses to the emails but in those responses it patently failed to answer 22 pertinent questions. There is a core question in those 22, and that is one of the reasons that we must have legal advice.

Mr. Carlyle has confirmed that there are two new members on the committee since 2013, but equally there are two members who were on the committee in 2013. There are four board-appointed members of the committee, so two remained and there were two new ones, of whom Mr. Carlyle is one. I will crystalise those questions into one key question. If the committee cannot answer the question as to whether it adhered to its legal requirements pursuant to Statutory Instrument No. 353 of 1951, how could we possibly agree to enter into that same forum without that core question, and it is just one question, being answered?

Mr. Declan Carlyle:

That question is among questions that were directed to the committee. In its replies to parliamentary questions, the company has set out that the secretary has replied to questions. He has also pointed to the fact that we do not have a quorum to hold a committee meeting. It is a chicken and egg situation. If the committee cannot meet to answer those questions because the elected members will not attend, it cannot answer the questions.

Mr. Emmet Cotter:

The questions were asked when the committee was fully functioning before the elected members resigned on 5 October. When the committee was fully functioning it still would not answer the questions.

Mr. Declan Carlyle:

The last committee meeting was in September last year. It was unable to answer the questions.

Mr. Emmet Cotter:

The questions had been put before that committee meeting. Subsequent to that, the committee failed to answer the questions.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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The committee has agreed the motion for the next committee meeting to call on the Minister to agree. If the Minister refuses, I propose that we invite him to appear before the committee to explain his reasons for refusal.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Before I adjourn the meeting-----

Mr. Ronan Gill:

I wish to make a last point. We heard earlier that there are 16,000 participants in the schemes. The substance of the discussion for the past 45 minutes has been about 25% of those. There is significant agreement around 75%, the regular wages scheme. There is a path forward in that space. CIÉ wishes to try to move this forward. We know we must do this by agreement. We have already outlined to colleagues that the statutory instruments require us to do it by agreement and CIÉ remains committed to funding the schemes in accordance with the rules. The committee is a separate entity in its own right. It can engage. We ask that the employee members would join the committee, release whatever questions they may have at the committee and the committee can determine how to progress them.

Mr. Dermot O'Leary:

I wish to make a last response.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Before you do, I wish to make a comment. Are you happy with your pension fund manager? Is he getting good returns for you?

Mr. Dermot O'Leary:

That is a debatable point.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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Bonds were mentioned earlier.

Mr. Dermot O'Leary:

The problem is that the rules of the game changed, and because of the liability situation, one is practically forced to invest 66%.

Mr. Thomas O'Connor:

It is 66%. As it is in a funding plan, the pension liabilities had to be invested in bonds. The previous Minister for Finance decreed that. It was bolting the door after the horse was gone.

Mr. Dermot O'Leary:

I wish to make a last point regarding Mr. Gill's assertion that we have some type of roadmap around the regular wages scheme, to paraphrase him. There is one thing to be aware of, and it is important the company understands this. The regular wages discussions were based on the premise that all was sweetness and light with regard to the legal opinion that we are now seeking in terms of the solvency issue, the 1994 piece as it were. Unless those questions are answered, there will be no progress on that issue either. I return to the point I made to Deputy Catherine Murphy. Unless one has clear sight of the problem, one cannot resolve it. It applies to the regular wages scheme as well, to be fair.

Mr. Greg Ennis:

I will finish on this. There was mention of bonds and so forth, but with regard to the funding aspect, this document is explosive, despite what Mr. Carlyle says. He has validated that it is a real document. It refers, under the many options, to the use of property and contingent assets. The company did not choose to do that. It did the funding plan that went ahead. The document states that it is likely there will be strong resistance from the unions' members to such a plan and that it would require the board, at the very least, to reaffirm that it is not its intention to renege on its previous commitments to the unions' members with regard to the payment of post-retirement increases if the scheme funds are not in a position to pay them. That is a CIÉ document and we discovered this in recent days. That is simply not good enough.

Photo of Kevin O'KeeffeKevin O'Keeffe (Cork East, Fianna Fail)
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I thank all the witnesses and their associates in the Public Gallery. They were very informative presentations. I pity the men in the WRC who will be deliberating.

The joint committee adjourned at 12.40 p.m. until 9.30 a.m. on Wednesday, 28 March 2018.