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

I move amendment No. 18:

In page 4, between lines 21 and 22, to insert the following:“Non-Contributory State Pension

4. The Minister for Social Protection shall review the impact of the closure or significant deterioration in the value of defined benefit pension schemes on expenditure on the State Pension (non-contributory) and produce a strategy to prevent further closures or decline in value so that the State’s exposure is reduced and pensioners’ incomes are protected.”.

I will speak to the group of amendments tabled. On amendment No. 18, this was a mechanism I was used to trying to have debated because when other Members and members of the select sub-committee tried to raise the issue of the Irish airlines superannuation scheme, IASS, it was ruled out of order on the grounds that the Bill was not dealing with pensions, but, of course, it is because the Minister has so decided. The point I am making in amendment No. 18 is that in general terms the less protection the State provides for defined benefit schemes the greater the potential cost to it because if people do not receive their promised defined benefit pensions for one reason or another, because a company is in a position to walk away from its commitments, this will have a knock-on impact on their potential entitlement to a State pension and these costs will be transferred to the State. That is the point of my amendment. It is worthwhile considering the prospect that the State should review the impact of the closure of or a significant deterioration in the value of defined benefit pension schemes on State expenditure and the implications of this for the future cost of non-contributory pensions.

The main thrust of the amendments is to address the situation in which so many deferred and current pensioners find themselves under the IASS. They are former Aer Lingus, Dublin Airport Authority and SR Technics staff who were in what they understood to be secure, pensionable employment in one of the State companies where their terms of employment - the contract provided for a defined benefits pension at a particular level. In good faith they spent years working for a company and paid into that pension scheme, with a legitimate expectation that the company would honour its pension commitments.

In the 1990s, when both companies were trying to shed staff, various programmes were introduced and staff were encouraged to take early retirement and leave the company as deferred pensioners. Many came under pressure and those who opted to leave did so on the clear understanding that their pension rights would be preserved and that, on reaching pension age, they would be guaranteed the pension they were promised when taking up employment. Many of them have been in touch with me. All of the people concerned have contracts, whereby, when they opted to accept one of the exit packages, they were given a clear commitment in writing from the company that their pension rights would be preserved and that they would be guaranteed a certain level of pension on reaching pension age.

Earlier we talked about double insolvency in the case of Waterford Crystal pensioners and the need to ensure the State provided pension security for them. The figure of 50% was used. Companies that are successful, rather than insolvent, but with insolvent pension schemes are allowed to walk away from pension commitments made to their staff as a result of the 2009 Act which was copperfastened by last year's Act. If any Member of the House was told that, having worked the required term to secure full pension rights, at the stroke of a pen his or her pension would be cut by 40% to 60%, there would be uproar and no Minister would contemplate doing it. In the case of any group of public sector workers such as teachers, let us imagine the reaction if teachers were told that, on reaching retirement age, their pensions were going to be cut by 50% or 60%. People would have taken to the streets long ago and there would be a revolution, but that is exactly what is happening to deferred pensioners under the IASS.

There is now less protection for people in schemes of companies where there was no issue with solvency than for those facing double insolvency. The Minister spoke about a guarantee in respect of pensions of up to €11,000 or €12,000, with the average private sector pension being €10,000, but that is of no comfort to those who had an expectation that they would receive a certain level of pension which has been wiped away. We are seeing this more and more in the IASS companies and across the private sector. Pensioners are being sold down the Swanee in terms of undertakings or guarantees they understood they had. Where there is a deficit in a pensions scheme, a company can shrug its shoulders and walk away and the State states it is okay. That is outrageous and if the principle was applied to the public sector, there would be uproar. If there is a deficit in a defined benefit pensions scheme, it should be treated as a debt of the company. There is no reason that should not be the case. It remains with the company which should be required to meet its commitments to staff over a number of years. I cannot see the rationale for not requiring successful and solvent companies not to pay their debts in the same way as others. We dealt this issue in the legislation last December and I cannot see how, in the Minister's eyes, it is acceptable for companies in a healthy position to simply walk away and leave former employees high and dry.

What is happening to the deferred members of the IASS is a disgrace and the failure of successive Governments to legislate to prevent companies from reneging on pension promises has led to this sorry state of affairs where future and existing pensioners stand to lose existing pension benefits. Last year there was an opportunity to do something about the matter, but it was not taken. The terms of reference of the expert panel set up to examine it and the process by which the panel engaged with the unions and companies concerned have resulted in recommendations on additional payments being targeted primarily to benefit existing employees. Existing employees are represented, while existing pensioners are protected to the level of 90% in some cases and less in others. It is a sore point for many, but the ones who have lost out to the greatest extent are deferred pensioners who do not have a voice. There is no right of appeal; they have been completely discarded; their rights have been trampled on and they are left in appalling situations where retirement income will be a fraction of what was expected.

The manner in which the expert panel approached this issue and its terms of reference were inadequate. It seems that the interests of deferred members have not been adequately taken into consideration. There is a requirement to have due regard to the interests of different categories of member, but there is no evidence that this has happened in the case of deferred members. It was incumbent on the Minister for Transport, Tourism and Sport to examine the matter and be satisfied that all parties had been given due regard, but it is quite clear that did not happen. Before the panel reported to him and before he saw the recommendations, he replied to parliamentary questions saying he intended to sign the orders. He pre-empted the outcome of the process. A couple of weeks ago, when the deferred members met the Minister for Social Protection to express their grave concerns about their future, they felt it had been a successful meeting and that they had received a fair hearing. As the Taoiseach told us, later that day the Minister for Transport, Tourism and Sport consulted the Minister for Social Protection and signed the orders. Deferred members have every right to feel aggrieved.

The Government had plenty of opportunities to provide a political solution, which is what is required. By any standard, the deferred pensioners have been unfairly treated. They did not receive an adequate hearing and have not been adequately considered in the report of the expert panel. The Minister for Transport, Tourism and Sport appears to be quite happy to support the expert panel in so doing, which position was endorsed by the entire Cabinet. The people in question have been sold down the Swanee and left with no option but to take legal action. They have contracts and signed undertakings from their respective companies outlining their pension entitlements. Although it took a very long time for it to come around, we saw that legal action was required by the Waterford Crystal workers to get any movement on the part of the Government in their case. Regrettably, it seems that the members of the IASS, the Irish airlines superannuation scheme, have been put in exactly the same position and the same action will have to be contemplated. It is regrettable that the State is standing idly by, stating it is fair game to treat in this manner pensioners who had a legitimate expectation that they would have their pension commitments honoured by the Dublin Airport Authority, which is still a semi-State company, and Aer Lingus, in which the State is a significant shareholder. It is also wrong to sell them down the Swanee when the companies concerned are in a healthy state and could afford to meet the pension commitments they made. It is regrettable that the Minister is not taking a more proactive role in upholding these pensioners’ rights. Even at this late stage, I appeal to her to do so.

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