Róisín Shortall (Dublin North West, Independent) | Oireachtas source

I wish to express disappointment at the Minister's attitude to the debate on this legislation. Many people, particularly spokespersons, have put in considerable time working on this Bill and it is regrettable that once again a wall has come down blocking contemplation of any amendments. Like many of her Government colleagues, the Minister is making a sham of what should be proper debate in our national Parliament. I ask her to reflect on the fact that not all wisdom resides on the Government side of the House. It would encourage us Members who have a mandate to represent the public here if it was clear the Minister was at least open to considering other points of view and other approaches to issues.

The big problem with this legislation is that it seeks to put a sticking plaster on an area that needs fundamental reform and does not make any serious attempt to introduce proper pension reform or protection. This is what is required. We need a whole of Government response, in particular a response from the Minister for Finance and the Minister for Social Protection, to tackle this issue. Dealing with loose ends or various aspects of the pensions issue does not get to grips in a serious way with the many problems that affect the pensions area. It is regrettable that a more fundamental approach has not been taken.

This group of amendments deals with the issue of a single insolvency situation, where a company is solvent, but the pension scheme is not. It is regrettable that no attempt is being made within the legislation to ensure that at least some of the deficit in a pension scheme will remain as a debt on a company. This is the single biggest flaw in the legislation that the Minister has brought forward. As I described it earlier, this legislation is another form of corporate welfare. It is also another example of socialising what is essentially private debt. In a situation where a solvent company moves to wind up an insolvent pension scheme, the Minister proposes that the pain will be shared among the existing and deferred pensioners. None of the pain would be taken by the company concerned.

The company concerned entered into an agreement with its employees that if they made certain contributions, the company would make certain contributions and there would be certain pension benefits arising out of the agreement.

The Minister is now telling the corporate world that companies that wish to wind up defined benefit pension schemes may do so and may walk away, as other speakers have said. The Minister will spread the pain to existing pensioners who previously enjoyed security and a sense that their income would not be affected in future. She will spread the pain and proposes to reduce the pension benefits of existing pensioners to improve the pension prospects for deferred pensioners. The big issue in all of this is that the body that was contractually required to honour its agreement in respect of its pensioners and future pensioners will not be expected to do anything about it. As we have seen in recent times, more and more companies, including very profitable ones, are choosing to wind up defined benefit pension schemes. Unlike in other jurisdictions, they are being allowed by the Minister and the Government to walk away from these debts. There can be no justification for this whatsoever.

Changing the priority order to benefit future pensioners at the expense of existing pensioners merely spreads the unfairness further and does not tackle the core issue. Ireland will allow very rich companies to simply walk away from the debt of their pension promises. One must question why the Government proposes to do this in the current circumstances. It does not happen anywhere else in Europe and companies are certainly not allowed do this in the UK. There is a sense of social solidarity between governments and people who in good faith entered pension schemes, made contributions over decades and had a reasonable and fair expectation the commitments entered into by their employers or former employers would be honoured. Through this legislation the Minister will facilitate and allow a situation whereby these commitments will be binned by the companies concerned. I cannot understand how a Minister of the Labour Party, in particular, could allow this situation to arise or would facilitate it in developing.

If a suggestion were made to do anything in the public service along the lines of what the Minister proposes to do to private sector workers, there would be riots in the streets. For example, what would happen if the State told teachers it was closing down their pension scheme and would not honour earlier commitments? Essentially, this is what the Minister will allow companies to do. She will allow them walk away from their responsibilities and leave people high and dry with regard to the reasonable expectation of pension benefits.

What worries me about this is that when people entered into an agreement with their former employers to make pension provision over their working lives, the expectation was that the commitment would be honoured in full. There is no reason healthy, solvent companies should not be required to honour this commitment to the level of 100%. In essence, this was the agreement reached and the contract made. Where this is not possible, it should be up to the Pensions Board to ensure any outstanding debt and deficit in the scheme remains as a debt with the company. Otherwise, there will be no justice in what the Minister proposes to do. This is why I propose that solvent employers should be required to honour the commitment to the level of 100% and should not be allowed wind up schemes without doing so.

I also propose that the maximum pension benefit in a case of single insolvency should be €60,000. This is an exceptionally generous pension arrangement. There was recognition of sorts by the Government that this is the maximum that should be subsidised in any way by the taxpayer. Last year in the budget the intention of limiting pension tax relief was announced to allow for a maximum pension of €60,000. This is a very generous pension. There seems to be recognition there is no case whatsoever for the taxpayer to subsidise pensions above this level. For this reason I propose that, as well as requiring companies to adhere to their original commitments and to 100% funding of pension arrangements, we should establish a maximum of €60,000. The Minister's proposals to reorder the priority will mean that people on very small pensions will see these pensions cut, but the pensions of some very high earners in a company scheme, which could substantially exceed €60,000, will see a percentage reduction. There is no justification, in my view, for making provision for pensions in excess of €60,000. It would be much fairer if a pension limit of €60,000 were to apply in the reordering proposed by the Minister.

Overall, it is extremely disappointing that the Minister will facilitate companies in welshing on commitments entered into with their former employees and allow a situation to exist where profitable companies completely renege on their commitments to their former employees. She will facilitate this, and there will be a knock-on effect for the people concerned and a knock-on impact on the State because of the subsidies that must provided to pensioners as a result of the reduced benefits. This seems to be another bailout for the corporate sector. I cannot see how allowing people to walk away from their financial responsibilities can be described as anything else. I must say it is incredible that the Minister would propose to do this.

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