Joan Burton (Dublin West, Labour) | Oireachtas source

They are in trouble because of the worldwide collapse of the stock market and the way in which the stock market and bond prices have been affected. That is the core problem for the schemes, dating back to the time of the dotcom bubble and the catastrophe from 2008 onwards.

On the approaching deadline of 30 June for funding proposals, more than 300 schemes are due to send in funding proposals to the Pensions Board. The board will then decide what steps to take scheme by scheme on a measured basis and taking account of the individual scheme circumstances. However, it must be emphasised that trustees must meet their legal obligations, and ultimately the Pensions Board will use its regulatory powers where benefit underfunding is not properly addressed. This is to protect scheme members, not to punish employers. After 30 June, I will be in a position to assess the extent of the funding difficulties and the effectiveness of the measures that have been taken or are being proposed.

On the priority order, Deputy O'Dea will be aware from his own experience that this is a highly sensitive area. He did not refer to the fact that the priority order involves reducing the pensions of existing pensioners - that is what he was proposing - and using those funds to provide additional moneys for current employees and former or deferred members of the scheme. As he will be aware, this not a straightforward matter. Defined benefit pensions are not the significant amounts for many individuals that people suppose. For example, 40% of defined benefit pensions pay out less than €6,000 a year and 70% pay out less than €24,000, which are not large pensions. The proposal to reduce those kinds of pensions in general proposals made by some - I am not suggesting Deputy O'Dea advocated that - relates to relatively small pensions. We must look at this with considerable care and sensitivity towards all those involved. In any priority order, the large six-figure defined benefit pensions to which Deputy O'Dea referred would have to bear a significant part of the rearrangement, but they are a small fraction of the total number of such pensions in payment. That is what I want Members to reflect on. Considerable work has been done on this issue and I will bring proposals to Government, in the light of the outcome from the funding standard and the consultations under way with the Attorney General on the appropriate policy response to the Waterford Crystal situation. As I stated earlier, my Department and I have been in detailed consultation with the Attorney General and her staff on the Waterford Crystal case, which was referenced by the Irish courts to the European Court and which must return there on certain matters.

During the course of the debate, Deputies referred to the position of self-employed people in relation to social welfare entitlements.

Self-employed persons are liable for PRSI at the rate of 4%, which entitles them to long-term benefits such as the contributory State pension and widow's pension. Ordinary employees who have access to the full range of social insurance benefits pay PRSI at the rate of 4% but as people know, employers also make a PRSI contribution of 10.75%, leaving the total contribution at just under 15%. In 2011, I established the advisory group on tax and social welfare and the issue of self-employed people has been referred to it in order to establish whether wider cover is technically feasible and financially sustainable.

In this context, I also mention the findings of the recent actuarial review of the Social Insurance Fund, which I published late last year. The review found that the required contribution as a percentage of salary needed to provide the core full-rate State pension contributory - which is the benefit currently available to self-employed contributors - is approximately 15%. This compares favourably with the 4% rate currently paid by the self-employed. Therefore, in terms of the pension entitlements, the report concluded that the self-employed achieve very good value for money in terms of the PRSI contributions paid. Any proposals to revise the social insurance system for self-employed persons by extending social insurance entitlements will have to be considered in a budgetary context, taking account of the findings of the actuarial review.

Self-employed workers may access social welfare payments supports by establishing entitlement to assistance-based payments such as jobseeker's allowance and disability allowance. In the case of jobseeker's allowance, they can apply for the means-tested jobseeker's allowance if their business ceases or if they are on low income as a result of a downturn in demand for their services. In general, their means will take account of the level of earnings in the past 12 months in determining the expected income for the following year and, in the current climate, account is taken of the downward trend in the economy.

I recently met a large delegation from the Irish Farmers Association as many Members mentioned farm assist and the rural social scheme. Traditionally, means are assessed for farm assist on the previous year's earnings and looking back. However, I made it very clear to the IFA that if, for example, a farmer's means have changed very rapidly, I have advised that the farmers in question should go back to local social welfare management with more current evidence.

Retained firefighters who have previously applied for a jobseeker's payment and have not had their claim approved will have to reapply in order to benefit from the legislative proposals I am introducing. There is no retrospective provision contained in the Bill. All retained firefighters will still be assessed based on their individual circumstances and they must continue to be genuinely seeking work to be awarded a jobseeker's allowance claim. However, special dispensations are being created so that retained firefighters will no longer be disallowed on the basis that they will not be available for work, given their requirements to be near their respective fire station when on call. As Deputy Broughan noted, this has been sought for a very long period.

I will deal with Deputy Ó Snodaigh's comments concerning recent budgets. I have protected core welfare rates in successive budgets and ESRI research has shown the importance of that, as Ireland's system of social transfers remain more effective in preventing poverty than any other EU member state. The poverty reduction effect in Ireland is enormous when compared to most other EU member states. Since coming to office, this Government has sought to protect the most vulnerable in society while taking the necessary decisions and introducing the necessary reforms to stabilise the economy and get people back to work. This Bill will continue those reforms.

Today's figures indicate an increase in the number of employed people, and I am aware that many of the improvements relate to people working on a part-time basis. It is very satisfying to see the first serious increase in employment since 2010 and it is an important factor for many people and their families. I continue to encourage employers. I also encourage Members who mentioned that people found it difficult to take up offers of work to give such information to local social welfare officers. We have an employment relations division in the Department for the first time and we are knocking on employers' doors and meeting them. I have completed approximately eight road shows around the country in which I met employers and people involved in human resources. So far, between 2,000 and 2,500 people have come to those events and in July we will launch the Jobs First initiative which will provide incentives for employers to take people from the live register and give them a cash payment.

Deputy Shortall commented on the reform of tax relief and the budget. As the Deputy knows from the Minister's Budget Statement, the reform has been committed to by the Minister for Finance and it does not fall within my remit to carry out that reform. The taxation side of pensions is dealt with by the Minister for Finance but there is a commitment in the budget to concentrate tax reliefs for pensions on people of low and middle incomes, as well as people in atypical work and women who may have had work interrupted from time to time because of involvement in caring and family commitments to children or older people. That remains the most important element.

There are a number of examples from countries with compatible systems where additional pension provision is being built up. These include processes in New Zealand and the recent example in the United Kingdom of the commencement of auto-enrolment in building additional pension entitlements. The officials in my Department have done a great deal of work in examining those systems but as we are still in much economic difficulty, some have indicated that funding them would probably be difficult for many people. I am confident we can move to that kind of system in the not too distant future. It will provide enhanced coverage as it has in countries like Australia.

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