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

Deputy Willie O'Dea mentioned the process of tabling amendments. Last week we were dealing with the Social Welfare Bill whereas this week we are potentially dealing with a social welfare and pensions Bill. This is not the way to business. While I am not saying we should not deal with the amendments, if we had been aware of substantial changes to the nature of the Bill, we would have put more time into preparing amendments on the issue of pensions. While we introduced some amendments on Committee Stage, most of them were ruled out on the basis of putting a charge on the Exchequer or on the people. The same will happen later today. In many ways, the amendment comes out of the blue and, by its nature, changes the Social Welfare Bill to make it a social welfare and pensions Bill.

It is consequential on the 2013 Act, which introduced a provision to guarantee a portion of the pension entitlements in the case of double insolvency, when the pension scheme and the company have been declared insolvent. The Act guarantees 50% of pension benefits and, in the case of pensions in payment, 100% of the first €12,000. In the case of double insolvency arising after the passage of the 2013 Bill, the State is on the hook for the difference between what the scheme covers and the level of payment guaranteed. We had a long debate at the time, although not as long as we should have had, about the priority and order. I will not rehash that debate.

The Department and the Tánaiste were not ready to propose this amendment on Committee Stage, which is the more appropriate time to deal with the amendment and tease out some of its peculiarities. When there is a major change to legislation, we receive an explanatory memorandum that explains the consequences. Seeking leave to introduce this amendment was done with one line at the committee. We did not have the text or a proper explanation.

However, it was at this late stage when my office got to grips with it. An explanatory memorandum of some sort should have been provided not just to social welfare spokespersons but to every Deputy. This has the potential to impose a substantial charge on the Exchequer. Accordingly, every Member should have been entitled to some prior information on the effects of these amendments.

When the Social Welfare and Pensions (No. 2) Act 2013 was debated and we dealt with the priority order, questions were asked about the retrospective application of the legislation to the Waterford Crystal pensioners. I was informed then that a priority order could not be retrospectively applied to companies that were already insolvent. Today, we are introducing legislation which seems to address this very issue.

I hope the Minister does not mind my pointing out problems with her amendment. It states that the proposed new section 4 refers to section 10 of the Social Welfare and Pensions Act 2013. Section 10 of that Act has nothing to do with pensions. It should read section 10 of the Social Welfare and Pensions (No. 2) Act 2013. This is a simple mistake but I hope the Minister has the time to check it and rectify it before we look silly. However, that is the nature of rushed legislation.

Why, in view of the delay in acting on this matter before, is there now a rush? In the debate on this legislation in 2013, I argued for the need for retrospective provisions. However, the relevant provisions of that Act have not been used at all since it was passed. At the time, I argued the relevant double insolvency that was being protected against in the future was that of Waterford Crystal. That predated the Act, as the company had become insolvent since 2009 and would be covered by the legislation. The Robins judgment in Britain, which found that the State had an obligation to protect a portion of workers’ pension entitlements where their employer had become insolvent, had been made in 2007. At that stage, we were also aware that the Waterford Wedgwood workers in Britain had received 90% of their pension entitlements, but nothing like that was offered in this State.

Opposition Members do not have any figures before them, yet the Minister is asking us, as well as her backbenchers, to allow the State to write a blank cheque. How much in hock will we be to subsidise the State’s portion of the Waterford Crystal workers’ pension scheme? Will it be €100 million or €200 million? We deserve to have some kind of estimate. I understand there is an ongoing process with the Waterford Crystal workers which could be choreographed to resolve issues through mediation rather than going back to court. This is to be welcomed. These workers ended up with nothing in their pension entitlements and, regrettably, some of them have died since. That is the scandal of this system. This and the former Government did not act quickly enough when the European Court of Justice judged that the State had a liability to protect pensions in such circumstances. How many other similar cases are there? We know of Waterford Crystal because that was one of the large companies that folded at the time. The Department’s officials advised there are not many, but exactly how many other cases could potentially arise? It covers a long time, from 2007 to 2013. Could liabilities emerge if other workers in similar circumstances want to get their entitlements? Could this add substantially to the cost of this proposal? In the case of Waterford Crystal, it affected 1,300 members of the pension scheme, which had a deficit of over €100 million.

In his 2014 Budget Statement, the Minister for Finance stated that the pension levy would pay for the cost of the guarantee. The Minister for Jobs, Enterprise and Innovation, Deputy Bruton - maybe even the Minister herself - repeated this. The pension levy has been used to promise the earth, moon and stars, but it is unlike the bank levy, which is ring-fenced for a particular fund. The pension levy is supposed to pay for the jobs initiative and close the Exchequer deficit. How will the Minister guarantee that the pension levy will pay over €100 million for Waterford Crystal and other double insolvency defined benefit schemes in the future if it is not ring-fenced?

The pension levy is paid by those with defined contribution pensions, but this State guarantee is extended only to those with defined benefit pensions where the employer is insolvent. The reality is that the cost of this guarantee will come from general taxation. The Minister must make clear to Members what the implications will be for the State’s finances.

It was made crystal clear by the Robins judgment in 2007 that action was required to protect pensions. For four years, the previous Government failed to act on this. With the 2013 Social Welfare and Pensions (No. 2) Act, the Minister dealt with future liabilities from double insolvencies but did not address the Waterford Crystal issue.

This legislation barely scratches the surface of the pension crisis. We will be back to this again, regrettably, to ensure that inadequately protected pension schemes get better protection. Many schemes are in difficulties. On Report Stage of the Social Welfare Bill, we will try, given the restrictions on tabling amendments, to address the likes of the Irish Aviation Superannuation Scheme. Changes to pension provisions were rushed outside the House to force workers and pensioners to accept a change to that scheme. The Abbey Theatre pension scheme is another one which did not get a full hearing as to why it was changed.

Changes were made a number of years ago to companies that were in difficulties with defined benefit pension schemes. The view was that they would not be in difficulties if things improved in the future but some employers took the opportunity presented by the downturn and the underfunding of these schemes to chance their arms and force defined contribution schemes on workers and deferred members. This group of people is not often mentioned in the debate because those involved do not have as many rights as active members or pensioners. Pensioners receive a pension and need greater protection and this is reflected in the priority order introduced by the Minister. My input on this issue has been with a view to guaranteeing a fair distribution in all circumstances to all contributors to pension schemes.

I am not opposing the introduction of this; I merely think this approach is strange as it comes many years after the European courts made the State aware that it has a liability in this area. We will address this further on Report Stage.

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