Mary Hanafin (Dún Laoghaire, Fianna Fail)

Amendment No. 22 contains the definitions necessary to the introduction of amendments to the Pensions Act 1990. Amendment No. 23 in section 41 of the Act is consequential to the proposed amendments. It amends the section to the effect that the funding standard will apply to the proposals in amendment No. 24.

Amendment No. 24 outlines changes to section 48 of the Act which modify how the assets of an under funded defined benefit scheme in wind-up are prioritised. Currently, top priority is given to pensions in payment, including any future increase that may be allowed by the terms of the scheme. Thereafter, the benefits of both current and former employees are paid, again including any post-retirement increases and benefits. This amendment will apply to schemes that wind up after the passing of this Act and to schemes that wound up before the passing of the Act but which have not commenced discharging the liabilities of the scheme assets. The proposed changes retain the priority given to pensions in payment followed by benefits to current and former employees and only then are post-retirement increases to all categories of members to be paid. In effect, the changes do not impact on any pension currently in payment but merely lower the priority given to any post-retirement increases that may be permitted under the terms of the defined benefit scheme, thus ensuring increased resources to securing the accrued pension benefits of active and deferred scheme members, both former and current employees.

Amendments Nos. 25 and 26 amend section 50 of the Pensions Act to achieve three results: to extend the categories of members and benefits to which a restructure of a defined benefit pension scheme benefits can be applied; to extend the conditions under which a defined benefit pension scheme can be restructured; and to provide that the scheme members must be given an opportunity to make representations to the trustees of the scheme before any amendment to the scheme is made. Current legislation provides for the restructuring of a defined benefit pension scheme but only to the extent that it affects the benefits of those employed by an employer sponsoring the scheme. This restructuring does not extend to the accrued benefits of scheme members no longer employed by the sponsoring employer or to post-retirement increases to benefits. This limitation in restructuring the scheme might give the trustee no option but to wind up the scheme. The proposed amendment to the Pensions Act will broaden the scope of the scheme restructure to include those currently in employment who are the active members, and those who have ceased employment with the current employer and have not reached retirement age, known as the deferred members, and the provision of post-retirement increases for all categories of scheme member. It must be stressed that this change will not impact on the pension current in payment to pensioners.

This amendment also inserts a new section 58 to the Pensions Act which will allow pension scheme trustees, with the consent of the Pensions Board, make such amendments as may be necessary to secure the future viability of the scheme where the only alternative to such changes is the winding up of the scheme. The section also allows for regulations to be made requiring trustees of relevant schemes to give notice to scheme members of any proposal to amend the scheme. That concerns the question Deputy Enright asked earlier. It allows for members to make observations to the trustees on the proposals before any changes are made.

Amendment No. 27 provides powers to the courts to grant relief to pension scheme trustees from liability for breach of trust where the court deems that the trustee acted honestly and reasonably with regard to the circumstances of the case.

Amendment No. 28 amends section 3 of the Pensions Act and creates a separate and more serious offence for failure of an employer to remit pension contributions deducted from the salary or wages of an employee to the trustees of the pension scheme.

The purpose of amendment No. 29 is to strengthen the role of the regulator in respect of a failure of an employer to remit pension contribution deducted from the employee's salary wages to the trustees of the pension scheme. This amends section 3 of the Pensions Act to provide that certain payroll-related documents and the information contained therein are admissible as evidence in court without the requirement to prove the content of the documents. It further provides for two rebuttal presumptions: first, that a payroll document found on the employer's premises relates to the employee or employer concerned; and second, the author of the document retrieved from a computer is the person who ordinarily uses that system.

Amendment No. 30 provides that the Minister for Finance may, after consultation with the Minister for Social and Family Affairs, introduce a pensions insolvency payment scheme, PIPS. This scheme is an Exchequer cost-neutral scheme for situations where a defined benefit pension scheme is in deficit and the sponsoring employer becomes insolvent. PIPS is intended to make it cheaper to pay for the pensions of retired pension scheme members so that more money is available for the pensions of those yet to retire. Under PIPS, trustees of eligible pension schemes will have the option of paying the Exchequer a sum that will cover the cost of paying the pensions of retired members instead of buying annuities. We expect that in some cases PIPS will be a cheaper option than buying annuities on the open market. Any savings could then be put towards the pensions of those yet to retire, thereby reducing to some extent their pension shortfall. Schemes wishing to participate will first apply to the Pensions Award for certification. On foot of certification schemes may apply to the Minister for Finance to participate in PIPS at which point they will be quoted a price by the National Treasury Management Agency for the cost of paying the pension. Trustees can then compare the cost of participating in PIPS to the cost of annuities on the open market before deciding which option to choose. This Bill provides for the necessary primary legislation under which the Minister for Finance, in consultation with the Minister for Social and Family Affairs, will make more detailed regulations setting out the details of how PIPS will work. PIPS will become available on a three-year pilot basis following which it will be reviewed.

Amendment No. 31 provides the appropriate citation for this Act to take account of the pension component and amendment No. 33 amends the long title of the Bill to take account of the pension changes.

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