Joan Burton (Dublin West, Labour) | Oireachtas source

I move amendment No. 1:

In page 3, line 5, after "Acts;" to insert "to amend the Pensions Act 1990;".

Amendment No. 22, which we have just discussed, will allow the Minister for Finance to draw down moneys from the Central Fund to discharge liabilities which may accrue to the State in the event of the winding up of a defined benefit pension scheme where both the employer and the scheme were insolvent, the date of the winding up of the scheme was on or about 25 January 2007 and before 25 December 2013 and the resources in the scheme were not sufficient to fund a minimum level of benefits. That situation is referred to as a double insolvency.

The issue of a potential liability on the State arises following the European Court of Justice judgment in the Robins case, delivered on 25 January 2007, and the Irish case of Hogan & Ors v.Ireland, in which judgment was delivered on 25 April 2013. Both cases were concerned with the transposition of Article 8 of EU Directive 2008/94, known as the insolvency directive. The insolvency directive requires member states to ensure that necessary measures are taken to protect the interests of employees and also the interests of persons having already left the employment of an employer at the date of the employer's insolvency. This protection is in respect of rights conferring on them immediate or prospective entitlement under supplementary or occupational pension schemes. In its decision in the Robins case on 25 January, the European Court of Justice found that where the measures in place to protect the interests of scheme members failed to secure at least 49% of their entitlement, the level of protection was not sufficient to secure compliance with the directive.

In 2010, a case was brought on behalf of ten members of the Waterford Crystal staff and factory pension schemes against the Minister for Social Protection, the Attorney General and Ireland for the alleged failure by the State to properly transpose the insolvency directive and for consequent financial losses suffered. In 2011, the High Court referred certain matters to the European Court of Justice seeking clarification on provisions in the directive. The European Court of Justice delivered its ruling in the Hogan case on 25 April 2012 and reaffirmed that where the measures in place to protect the interests of scheme members failed to secure at least 49% of the members' entitlement, the level of protection was not sufficient to secure compliance with the directive.

Deputies may recall that I amended the Pensions Act last year to change the manner in which the resources of a defined benefit scheme would be distributed in the event of a wind-up of a pension scheme where both the employer and the scheme were insolvent. The purpose of the change is to ensure all beneficiaries of the scheme, including pensioners, current employees and former employers who have not yet retired, receive at least 50% of their benefits and to protect pension benefits in payment of up to €12,000 per annum. As I indicated, this measure has been introduced against a background where many, if not all, of the members of a scheme have an entitlement to a contributory retirement pension. At the time the amendment provided that where the resources of a defined benefit scheme were not sufficient to meet the level of liabilities, the State would provide funding from the Exchequer to address the shortfall in the resources of the scheme.

In budget 2014 and the Finance (No. 2) Act 2013 the Minister for Finance provided for changes to the pension levy to provide funding to meet potential State liabilities emerging from pre-existing or future pension fund difficulties. The measures in the Social Welfare and Pensions (No. 2) Act 2013 are not retrospective and apply to double insolvencies that arise after 25 December 2013, the date of enactment of the Social Welfare and Pensions (No. 2) Bill 2013. The amendment allows for payments from the Central Fund to be made by the Minister for Finance in circumstances where the State may need to address liabilities that could arise between the date of the Robins judgment which was delivered on 25 January 2009 and 25 December 2013, the date on which the Social Welfare and Pensions (No. 2) Bill 2013 was enacted. I am hopeful the regime now in place will eliminate any recourse to the State to support schemes which wind up in a double insolvency. I expect liabilities that may have arisen prior to the 2013 Act to be resolved in the short term.

As a consequence of the changes to the Pensions Act 1990 proposed in amendment No. 22, it is necessary to amend the Long and Short Titles of the Bill and make some other technical changes. Amendment No. 1 changes the Long Title to provide that the Bill amends the Pensions Act 1990, as well as the social welfare Acts. Amendment No. 29 changes the Short Title from the Social Welfare Bill 2014 to the Social Welfare and Pensions (No. 2) Bill 2014. This amendment is also in line with amendment No. 30 tabled by Deputies Aengus Ó Snodaigh, Joan Collins and Clare Daly. In addition, amendment No. 29 provides for the collective citation of the amendments to the Pensions Act 1990 contained in the Bill with the Pensions Acts 1990 to 2014.

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