John Deasy (Waterford, Fine Gael) | Oireachtas source

A part of the Bill deals with a reduction in the payment of pensions to members of the public service under occupational pension schemes or other pension arrangements. Many public servants are unhappy with another reduction in their pensions, particularly retired civil servants on low pensions. However, it is obvious to everyone, even people in the public service, that many in the private sector have lost all or most of their pensions. In terms of pensions, most of the pain is being felt in the private sector.

One such private sector fund is the defined benefit pension scheme at Permanent TSB. This issue has developed as a consequence of management's reaction to a request by the Minister for Finance to review pay and benefits and to find savings of between 6% and 10%. The request followed on from a report by Mercer, entitled "Remuneration Review of Covered Institutions", which was commissioned by the Minister for Finance and published last March.

Permanent TSB's management has advised the Minister of its plan to make the required savings by ceasing payments to the defined benefit pension scheme and diverting funds to the new defined contribution scheme. It is estimated that the saving will be approximately 8% per annum. I have received a response from the Minister regarding this issue. From that response, I gather that the arrangement has his blessing. The Department of Finance should reconsider the matter.

The effect on the individuals in question would be devastating. The cessation of payments would force the trustees to wind up the scheme. That would have a massively detrimental effect on active and deferred members and could potentially reduce future benefits by up to 50%. Nationally, approximately 3,000 staff – past and present - are affected, including approximately 120 people in my constituency of Waterford.

In Permanent TSB there are two separate defined benefit schemes, and one is in better shape than the other. There is a liability of €127 million in the pension fund to which I refer. As I understand it, in 2010 it became clear that many defined benefit schemes were in deficit and the Department of Social Protection asked the trustees of funds to submit proposals to deal with the deficits. A funding proposal or recovery plan was required for all funds in deficit before the end of November 2010, but that was postponed indefinitely. The feeling among staff in Permanent TSB is that senior management at the State-controlled bank – it is important that we remember that – are finding the savings by hitting the ordinary staff member rather than taking any of the pain themselves. The question staff of Permanent TSB have is whether the Minister for Finance should allow management to wind up unilaterally a pension scheme belonging to a State-controlled bank without negotiation or before any other potential options for saving the fund have been properly examined. I can understand why they would ask such a question. Anyone would.

We all understand that many defined benefit schemes are in trouble but in this case there is a very strong sense that other possible solutions have not been examined, for example, ring-fencing benefits before a certain date and from that date forward all contributions would go to a defined contribution scheme, with future benefits payable depending on fund performance. Other possible solutions include allowing employees to make larger contributions, extending the retirement date or doing away with consumer price index, CPI, increases. I feel strongly that this is something the Minister for Finance should reconsider.

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