Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

Amendment No. 4, from Deputy Clare Daly, is new and I will not accept it. The amendment seeks to delete section 34 from the Bill and substitute it with a new section under which the airport authorities could establish new pension schemes only if they replicated the benefits under the existing IASS. We have been over this ground a number of times. If the amendment were to prove acceptable to the House, there would be no need to accept the original section 32 of the 1998 Act, which the amendment replicates. As I said before, the provisions of section 34 do not anticipate or pre-empt whatever solution the parties may come up with. This could even include a continuation of the current IASS if, somehow, the deficit in the scheme could be made to disappear. The Bill does not preclude this outcome no matter how unlikely it is. It does, however, allow for other possible outcomes to the discussions which, if we are being realistic and honest, are more probable than a continuation of the current scheme. The amendment would facilitate none of these more probable and realistic outcomes and would in all likelihood represent an insurmountable barrier to the parties' wish to implement any solution agreed by them.

Among the amendments I have tabled today, only amendments Nos. 10 and 13 are substantive. Amendment No. 10 provides that under section 32B(1) the trustees would have the power to amend the provisions of the IASS scheme to cease any further accrual of benefits under the scheme and simultaneously to cease the contribution liability of both members and employers. They will also have the power to make any other changes that are consequential upon any amendment they make in this regard. The exercise of these powers is subject to a commencement order, which I introduced on Committee Stage last week.

As I have already explained in detail the background and rationale for the decision, I will not repeat it. The trustees requested that in association with these powers provision should be included in the Bill for making it clear that if and when these powers are exercised, the trustees in the scheme will have no obligation to provide benefits under the scheme in respect of future service. While this is self-evident within subsection (1), I have no difficulty providing the further clarification contained in the amendment, which also requires that the trustees act honestly and reasonably when exercising their powers under the subsection.

Amendment No. 13 applies to statutory revaluation as provided for in section 33 of the Pensions Act 1990. On the IASS in the context of the particular proposals which are the subject of current discussions among the parties to resolve the difficulties of the scheme I have been at pains to express, here and in the Seanad, that the provisions in section 34 do not anticipate or pre-empt whatever solution the parties agree to the problems of the scheme.

This amendment is, however, designed to facilitate the implementation of a particular aspect of the potential solution which is currently under discussion by the parties on foot of the recommendations of the expert panel. Those discussions are centred on the expert panel's recommendations of mid-June which are in turn linked to the trustees' proposal of last February and the Labour Court's recommendation of May 2013. These proposals are referred to as "freeze and de-risk". The freeze element of the proposals refers to freezing the benefits accrued to the members while the de-risk aspect relates to the adoption of an investment strategy which seeks to minimize investment risks. An aspect of the freeze element of the proposals is the removal of the impact of statutory revaluation on preserved benefits so that future liabilities of the scheme can be locked down. This requires the disapplication of statutory revaluation as currently provided for under section 33 of the Pensions Act 1990. The amendment will give effect to such disapplication. However, under the amendment, revaluation cannot be disapplied in isolation from a decision by the trustees to cease contributions and benefit accruals under subsection (1)(a). This is a prerequisite for the disapplication of revaluation. In addition, I am making the operation of the amendment subject to a separate commencement order which is catered for in amendment No. 14.

These safeguards will ensure that revaluation under the Pensions Act will continue as normal unless its disapplication forms part of an overall solution to the problems of the IAS scheme. It will also ensure that active and deferred members of the scheme are treated on an equal basis at all times by the trustees, which is a measure requested by Members of both Houses of the Oireachtas. The provision is being introduced to facilitate the implementation of a particular element of the overall proposal currently under discussion by the parties. This relates to neutralising the impact of future statutory revaluation. If for any reason it does not ultimately materialise as part of the final agreed solution, the provision will not be commenced. On the other hand, I want to ensure that there is no legislative barrier to any resolution of the IAS scheme's difficulties agreed among the parties.

All of my remaining proposed amendments to section 34 are technical or represent drafting improvements. These amendments include amendments Nos. 5 to 9, inclusive, and 11 and 12. To clarify matters raised during our earlier discussion on the expert panel's proposal, I note that Deputy Daly is correct to say the €200 million being offered by Aer Lingus and the DAA will go into a new scheme for active and deferred members not the IAS scheme, which will be frozen and de-risked. Pensioners who may face a cutback in their benefits will also not put money into the scheme. They will simply be taking less out of the scheme.

Deputy Daly questioned some of the investment decisions of the trustee. As I explained on Committee Stage, my Department has neither the authority nor the competencies to second guess investment decisions made by a pension fund. Pensions policy is a matter for the Department of Social Protection and we have the Pensions Ombudsman and the Pensions Authority. It is not for us to argue about the rights and wrongs of investment decisions made. In any case, such decisions are not reversible. Many people would like to have made different decisions. There are many who would have liked to have bought their homes at a different time or who would have liked to have bought different shares or none at all. Once those decisions are made, however, they are not reversible and we must deal with the situation as we find it rather than as we might wish it to be.

It is indeed the case that Aer Lingus has reduced its staff numbers by half in recent years. As a result of that and other reasons, the company has become very profitable. The converse is true that for a long period it was very unprofitable in part because it was heavily overstaffed. Had it not been a State-owned enterprise or had it been another airline, there would have been compulsory redundancies rather than generous exit packages for those who decided to leave.

To reply to Deputy Ellis, what is proposed is to eliminate the deficit. That involves reductions in benefits for all concerned. This means reductions in payments in line with the Social Welfare and Pensions Act 2013, a 20% cut, a removal of unco-ordination for those who did not pay for it, and the removal of the effect of statutory revaluation for active and deferred members. The companies have made a significant contribution for active members and propose to do the same for the deferred members. On the specific issue of revaluation, the amendment is being included in legislation as it is an important component in the overall freeze and de-risk proposal from the trustees to solve these difficulties. It means that if the expert panel's proposals are accepted, it will be possible to inform the deferred members as to what pension they will get when they start to draw down rather than making it subject to revaluation. It gives those members who are currently deferred members a clear statement of what pension they will receive.

Deputy Daly raised the issue of a rule change to the pension scheme. I have checked up on that since we discussed the matter on Committee Stage and confirmed that in order to make a rule change to the pension scheme, the agreement of the trustees, employers and a majority of the members would be required. While I do not think it would be practical in this case to get an agreement to cease payments, I agree that it is not impossible. Certainly, it would be very difficult to achieve what we are trying to achieve in that way, however. We can achieve it through legislation while allowing those who currently pay into the scheme to cease to do so if they so wish, which is what airport workers have balloted heavily to do.

There were some questions from Deputy Mathews, Daly and others on fifth freedoms. Fifth freedoms are rights conferred on carriers to fly beyond Ireland to pick up and drop off passengers between Ireland and a third country in which the carrier is registered or established. The draft policy proposes that Ireland's objective in bi-lateral negotiations would be to reach an agreement on the basis of fifth freedom rights on a reciprocal basis taking into account EU criteria on fair competition. Aviation policy is a national policy and proposals in respect of granting fifth freedom rights envisage that a liberal approach will be taken using a case-by-case assessment applying equally to all international airports in the State. I am not aware of any threat by any US carrier to pull out of Ireland. US carriers are very welcome here and do very well on their Irish routes. I am sure they will continue to remain on those routes as long as they are profitable.

This is not the major departure in policy that people think. We already have existing fifth freedom agreements with non-EU, non-US countries including Singapore and Qatar. Airlines flying from those countries can already avail of fifth freedom rights. What is intended here is to grant fifth freedom rights on a case-by-case basis. If a carrier wanted to pick up passengers in Dublin and fly them to New York, Chicago or San Francisco, we would not be particularly interested. Those routes already exist and are served by US carriers and Aer Lingus. However, should an airline seek to establish a new route which does not already exist, providing us with new connectivity, we would look at that very favourably. I understand that Aer Lingus and US carriers want to protect their position. It is entirely understandable. They do not want to face more competition. However, it is not my role as the Minister responsible for tourism and transport to represent only the interests of Irish or US airlines or a pilots' or other union. My job as Minister responsible for aviation and tourism is to promote the public interest and what is best for Ireland. If that means new routes and new connectivity, we should welcome those.

We have already benefited from Emirates and Etihad coming to Ireland. People have seen that. Deputy Daly referred to Ethiopian Airlines which has announced an intention to run a route from Dublin to Addis Ababa and from there to LA. Currently, we do not have a direct route to Africa at all nor do we have one to LA. It would be in the greater business and tourism interests of Ireland as a whole to have direct routes to Africa and LA. I do not want to refuse an airline offering to open new routes on the basis that Irish or American airlines operating other routes believe it would somehow damage their interests.

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