Aengus Ó Snodaigh (Dublin South Central, Sinn Fein) | Oireachtas source

I move amendment No. 2:

In page 9, between lines 19 and 20, to insert the following:“9. The Principal Act is amended by inserting a new section 48A as follows:

“48A. (1)A healthy sponsor shall not be allowed to close a defined benefit pension scheme except where the scheme has reached a minimum 90 per cent funding standard.

(2) For the purposes of this section a healthy sponsor means an employer that—

(a) has positive net revenues, or

(b) has a parent company with positive net revenues.”.”.

We discussed these amendments, or similar ones, on Committee Stage. Their primary role is to ensure that a sponsor or a company that has sponsored a defined benefit pension scheme would not be allowed to close that scheme except when the minimum 90% funding standard has been achieved. The phrase "healthy sponsor" is the wording from the OECD report on pensions in Ireland, a substantial document which in many ways triggered what we are doing today, along with the fact that a number of these schemes have run into trouble or have had some type of difficulty including full closure.

Pensioners and active members have been left with much less than they had intended and agreed to when they initially signed up to their pensions. They had looked forward to their retirements in the hope that they would have pensions that would allow them to enjoy them. Some of them put away a substantial sum of money for a long period. Only yesterday I received a letter from a person affected by this Bill, although in his case there are peculiarities which I will come back to later. He said that after paying into a pension for 31 years, with a combined contribution from him and his employer of €90 per week, he can expect to receive a pension of €15 to €18 per week. The pension scheme is getting a substantial reduction on that €90 per week. That is obviously part of where these schemes are, as well as the collapse in this instance of the fund and the sponsor. It is a legacy case that is not necessarily covered by this legislation because it cannot be retrospective.

One of the problems that we and the OECD identified is that there are situations in which the sponsor or its parent company is solvent but desires to get out of the defined benefit pension scheme because it is seen as a liability on its books. The OECD review of the Irish pension system says:

Another weakness of Irish legislation is that it allows healthy sponsors to "walk away" from DB pension plans, shutting them down, without creating a high-priority debt on the employer, as is the case for instance in the United Kingdom. Under the UK’s “debt upon employer obligation”, the sponsor’s debt (if the plan is underfunded) is determined by valuing the benefits on the basis that they are bought out in full via immediate annuities (for pensioners) or deferred annuities (for non-pensioners).

We are trying to ensure that no company that is still trading - or, in the OECD's words, whose parent company has "positive net revenues" - can avoid or evade its responsibilities to a pension fund that is in crisis. We are asking that this be recognised in legislation to ensure subsidiaries of profitable multinational or Irish companies do not avoid their responsibilities by shutting down their pension schemes.

I urge the Minister, even at this late stage, to devise a mechanism that will allow this amendment to be accepted. There is an urgency about getting this legislation passed to ensure that people affected by the collapse of any scheme in the next couple of months are covered by it. Even in cases before the courts now the judges can see the Government's intention, although they do not have to abide by it. This is also tied to the European Court of Justice legislation on pensions and the EU directive.

I do not know whether the Minister has had a chance to examine the proposal before us. It does not deal only with pensioners who benefit from pensions now. It would also ensure that active members who are paying into the pension pot and deferred members are looked after. We will return to that. This ensures that responsibility lies with the employer in these instances.

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