Willie O'Dea (Limerick City, Fianna Fail) | Oireachtas source

Naturally, there are measures in the Bill with which I agree. Most of the provisions of the Bill on the social welfare side are fairly uncontroversial and unexceptional and are designed to provide administrative fixes. Some of them adopt proposals that have already been made to the Government which make a certain amount of sense and more of them simply implement in a legislative form measures which have already been announced by the Minister for Finance. My main criticism of the Bill is not what it contains but, rather, what it does not contain.

The Minister will be aware that the system that applies to a defined benefit pension scheme when it is wound up is insupportable. What happens is there is not enough money to pay every scheme member what he or she was promised when he or she joined and paid into it and the law states that whatever money is there must be taken in the first instances to ensure that existing pensioners get 100% of what they have been promised and if there is anything left over, it is to be divided amongst the workers and those whose pensions have been deferred. This is gravely unjust. I can quote instances of this. The current rules mean, for example, that a retired chief executive on a pension of €100,000, €150,000 or €200,000 is guaranteed that while somebody who is weeks from retirement, and who has worked in the company and contributed to the pension scheme for 30 years, might finish up with nothing simply for the sake of a few weeks.

Proposals have been made from civic society across the board to the Government that the system should be changed. Proposals have been made, for example, from ICTU, employers' bodies such as IBEC, the group representing pension schemes, the Irish Association of Pension Funds, IAPF, and actuarial bodies. There is consensus across society that this should be changed and it is high time to change it, particularly in the present situation where it is estimated that over 90% of defined benefit pension schemes are in deficit. All of these bodies across society recognise the inequity, or should I say "iniquity", of the present system and the urgent compelling need for reform. A survey carried out recently by the IAPF showed overwhelming support for the notion that the priority list should be changed, that there should be some equity brought into the system.

The OECD recently issued a report on the Irish pensions system for which the Government forked out €130,000 of taxpayers' money. In that report, the OECD made a compelling case for changing the priority list. They gave the Minister her first opportunity to implement a key element of their report in the introduction of this Bill and she has failed to do so.

Mr. Jerry Moriarty, who is spokesperson for the IAPF, stated on a number of occasions, along with others, that the rules should be amended for defined benefit pension schemes to give enhanced benefit to those still in employment rather than the current absolute weighting given to those already in receipt of their pensions. He summed up the position well, stating, "It is simply not fair that those nearing retirement age must suffer to such a degree by ... having their pension cut in half [or worse], while a former colleague who has just retired receives his full benefit for life". Trustees recognise that in an ideal world everybody should get that to which they are entitled, but where 90% or, perhaps, more of those pension schemes are in deficit, some of which have already announced their intention to wind-up and others of which no doubt will follow, we are not living in a perfect world and it is not possible to pay everybody his or her entitlement. Why pay one half everything to the exclusion of the other half?

Mr. Moriarty went on to state, "Add to that the super-cautious funding requirements for schemes currently in place, and employers are more likely to be deterred from making the significant contributions required to maintain current benefits". There is a rumour that the liability for a defined benefit scheme will be placed firmly on the employer. This is a further deterrent to employers to continue to fund retirement benefit schemes. Interesting, Mr. Moriarty, in 2011, stated that things were changing, they had spoken to the Minister and she promised she would change the system.

I have been told directly by IBEC that, at a meeting in October 2011, the Minister promised faithfully to reform the priority order. Unfortunately, she reneged on that promise and, instead, set up a consultation process. The consultation process was to consult about something she had already promised, but that provided only a temporary respite because those whom she consulted were also of the opinion that the priority order should be changed. Accordingly, I am informed, in September 2012, the Minister again solemnly promised to change the priority order.

The Bill represents yet another breach of promise. The promises, like Billy Bunter's postal order, are always made but never delivered. It is disingenuous, self-serving, outrageous and cynical that the Minister should come in here today, after that period of consultation and after making all those specific promises, and refer to the issue as "complex" - which it was when the Minister gave her promise in 2011 - "sensitive" - which, I presume, it was then too - and needing "careful consideration", and that she must get advice from stakeholders.

All the advice has been one way and there has been plenty of time for consideration. The Government has deliberately created an impression in the minds of the pension industry and potential recipients that it would rectify this injustice but it has failed to do so.

It is particularly cynical to seek to hide behind the decision in the Waterford Crystal case, which has nothing at all to do with it. That case does not require the Government to prevaricate and delay further in this vital reform. The Waterford Crystal case indicates that when both a company and the company pension scheme become insolvent or go into liquidation, the State would have to pony up in a defined benefit pension. I hope that in the vast majority of cases where these pension schemes will wind up, the company will not go into liquidation, so the Waterford Crystal case does not apply at all. In any case the Waterford Crystal case is about who pays but what we are talking about is the priority order in which the fund is applied for payment.

The Minister is well aware of the vital necessity of making this necessary change before 30 June. This date is critical because as a result of new rules introduced by the Government which make it more difficult for pension schemes to survive and which will make many schemes wind up if they cannot survive. Many of them cannot and will not submit a restructuring programme by 30 June to show how they will be brought back to solvency. The Minister knows and recognises this explicitly in legislation because, as she mentioned in her speech, the explanatory memorandum indicates this inserts a new section 50B into the Pensions Act 1990 to provide the Pensions Board with the power to wind up a pension scheme in circumstances where a scheme is under-funded and the trustees and employer are not in a position to adopt a funding proposal, or where the trustee of a scheme fails to comply with a section 50 direction to restructure scheme benefits. In other words, the people who drafted this legislation and the Minister envisage that there will be a number of wind-ups because people will not be able to meet the onerous requirements by 30 June.

Time will tell if I am right or wrong but tens of thousands of workers already face closure of pension schemes and a change in the priority order would help them to salvage some of those pensions. I am referring to active employees and deferred pensioners. By putting off reform yet again, the Minister is, unfortunately, condemning those people to penury. I have come across concrete examples in this regard and I will come back to them.

After 30 June, if a pension scheme winds up or cannot meet onerous funding requirements and provide a solution, the chief executive of a company - who may have a full pension of €100,000, €150,000 or €200,000 - will be fully protected but a 64-year-old worker who is weeks short of retirement may be left with no pension at all. As late as last weekend I had two groups who called to see me in my office in Limerick. One consisted of deferred pensioners from a defined benefit pension scheme which has already announced that it is winding up. The other consisted of investors in a defined benefit pension scheme which is almost certain to wind up, although it has not officially announced it. The first group consisted of three women in their 50s who took early retirement on the basis of a calculated pension of between €22,000 per year and €24,000 per year. As a result of the wind-up, with senior people getting up to €100,000 because they have already retired, the women are getting between €4,500 per annum and €4,800 per annum. That is a scandal and there is no excuse whatever to leave that unaddressed, particularly in view of the Minister's very specific commitments in this regard.

This is the Social Welfare and Pensions (Miscellaneous Provisions) Bill and the second part of it is concerned with pensions. I wonder if it should be called a pensions Bill at all as what is there in the Bill about pensions? There is a decision that could have a major impact on the real lives of people coming to see me, and they will be going to the media, but if it is avoided, what will the pension section of the Bill deal with? It deals with such monumentally important matters as changing the name of the Pensions Board to the pensions authority. How extraordinary and radical is that? Another dramatic, radical and far-reaching change will alter the title of the chief executive, who will now be known as the pension regulator. My goodness. The change to the number of people on the board is welcome. The Bill proposes to set up another quango, known as the pensions council, to advise the board. The most far-reaching, dramatic, Earth-shattering and monumental change of all is to allow the pensions ombudsman hold office for up to six years instead of for a fixed period of six years. We have the time, inclination and ingenuity to introduce these radical, dramatic and life-changing matters but the one measure that would have an effect on people's lives has been deliberately avoided.

To use an historical analogy, the Minister is fiddling while people's pensions are about to burn. The Cantillon column in The Irish Times of 23 May 2013 is relevant, although I am not singling out this newspaper as I could quote various sources that have commented adversely on the decision to avoid the central issue faced by the Government. The column in question argues that the pensions section of the Bill essentially contains "administrative" fixes and that none has the capacity to fundamentally alter somebody's financial circumstances, although the priority order does. I could not have put it better myself. The column went on to state that the "Government is looking for time but this is the second time it has pulled back on the issue, and some workers do not have that luxury". The article argues that by the time the Government acts, it will have no way of recovering these lost pensions, which is the issue in a nutshell.

Fundamental reform in pensions is not the only element missing from the Bill. There is no mention of the self-employed. We have discussed at length through questions, committees and in the public domain the notion of extending social benefits to the self-employed. There have been reports, articles, speeches and suggestions but there has been no action. I have read the reports and I am aware of how much this would cost. We are talking about the self-employed, and such people may want to be in a position to get jobseeker's or illness benefit in the event of a business folding or not doing well. They should know in advance what is the price of this and there should be a choice in paying that price.

An issue that deters people from setting up a business is the notion that if a person is self-employed, he or she will get no social welfare no matter what. The Minister may indicate that, technically, a person who has been self-employed and who does not have means or assets when a business folds should be entitled to jobseeker's allowance. It is a legal entitlement to seek that. Many social welfare officers are making it so difficult that the word has got out that it is practically impossible to get the benefit.

This is most unfair and should be sorted out. It is high time we faced up to the notion of allowing these people, if they so wish, to purchase further benefits. What this country desperately needs at present, in view of the fact that more than 400,000 people are still unemployed and 200,000 people a day are emigrating, not counting all of the people being taken on to schemes who therefore no longer appear unemployed, is to encourage people to create jobs for themselves and, hopefully, for others.

The Bill does not address pension coverage. According to the Pensions Board only 54% of people in the workforce have pension coverage. If we take it that 90% have coverage in the public sector, then pension coverage in the private sector is extremely low. The national pensions framework published by the previous Government in 2010 cites the examples of the hotel and restaurant sector where pension coverage is only 23% and the wholesale and retail trade where pension coverage is only 36%. Independent consumer research carried out on behalf of the Pensions Board indicates almost eight out of ten people who do not contribute said the State pension would not meet their needs in retirement. Although employers are obliged by law to offer employees access to a pension, independent consumer research shows that 43% of those interviewed had not been offered access and of these, 93% had never asked the employer about access to a pension. I suppose they dare not. A key issue is how to improve coverage. Among OECD countries only Ireland and New Zealand do not have a compulsory pension saving. Nowhere can I find in anything stated, proposed or done by the Government a move towards establishing a pensions structure which is financially sustainable and socially adequate. Fundamental questions such as this have not been faced up to by the Government.

I welcome some of the social welfare aspects of the Bill. I acknowledge the change in the law to assist the position of part-time firefighters. They have been making representations for many years and I regret previous Governments did not accede to them. It is a positive move which I acknowledge and appreciate. The Bill includes a provision which gives people the right in the case of refusal of partial capacity benefits to appeal to the social welfare appeals office. This is an administrative improvement. I do not know how much difference it will make but it is a step in the right direction. I welcome the measures to tighten identity authentication requirements, although a certain sensitivity will have to be shown to old age pensioners and people in receipt of disability benefits.

I also welcome the change in the family income support regulations but I must ask the Minister whether it will be confined to lone parents who will avail of the transition measures. Will it apply generally? There has been quite a lot of discussion and we have had many representations about the serious anomaly in the system whereby family income support is calculated at the beginning of the year and if one's circumstances change drastically, for the better or worse, the amount remains fixed for 52 weeks. I always thought the reason for this is because it would be administratively difficult to recalculate it in the event of a change of circumstances, but now it seems to be possible in the case of lone parents. Will it be confined to lone parents or will it be applicable generally? I ask the Minister to address this when she replies.

Section 6 of the Bill extends liability for PRSI to people who pay modified contributions and also have income from emoluments, a trade or a profession. I realise people in the public sector would have had to have joined before 1995 to be in receipt of modified contributions so this may be applicable to a limited number of people but it will apply to pension payment. I find objectionable the further provision in the section that one pays 4% on one's private income but receives nothing for it. The great United States of America was founded on a revolution with the slogan "No taxation without representation". Here, people are being asked to pony up PRSI contributions but are told they will receive nothing in return. I object to this.

I welcome the improvement, such as it is, outlined in section 10 of the Bill with regard to lone parents but there is an irony at the heart of the matter. I realise the previous Government proposed the change whereby the age of the qualifying child would reduce further and further and more and more people would be excluded from lone parent's allowance. It might be time to reconsider this in light of the poverty figures in the country and the fact that according to the statistics and percentages lone parents are one of the most vulnerable groups in the country to poverty. A huge percentage of lone parents live on the margins; I do not have the figures with me but I was looking at them recently.

In her opening statement the Minister stated we must encourage people to get out and work. I do not see how lone parents will be encouraged to go out and work by the Government reducing, as it has, the amount of money they can earn while working. I certainly do not see how they can be encouraged to go out to work if they are put on jobseeker's allowance when their child reaches a certain age. Many of them take up part-time jobs which help bring them back to the workforce, but those put on jobseeker's allowance because of the change in the age of the child will not be able to work because every euro earned will be taken from their jobseeker's allowance. It is a euro for a euro means test. Rather than encouraging people-----

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