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

This is a serious issue for those who for many years paid into a pension fund on the understanding that when they retired they would have a certain amount as it was a defined benefit pension scheme. It would have been laid out day one to them when they started employment, be it at 16 or 50, if they paid into the scheme they would enjoy a certain amount in a pension at the end. Obviously, the impact of the world economic crisis has put a major strain on many of these schemes. When we debated the Social Welfare and Pensions (No. 2) Act 2013, the Minister alluded to the substantial decline in the number of defined benefit schemes over the past several years. Some of this was due to the fact the schemes and their companies had become insolvent. In some cases, employers took the opportunity to force a different scheme upon their workers which was not as beneficial to the employees in the end but was to the company in some way. There has been a move away from defined benefit pension schemes to defined contribution schemes. Most people may not be aware of the substantial financial implications of such a move when they retire.

We had a discussion and the Minister produced legislation that was passed with a specific priority order, in terms of insolvent schemes and companies. That does not apply to what has been raised here so far. Concerns have been raised about how the IASS trustees looked at the pension scheme and how the actuarial figures were reached. We have been told there is a hole of €780 million in the IASS pension scheme and that is no small sum. Obviously there are implications for workers' pensions but another actuarial company could come up with a different figure that might be higher or lower. We are dealing with guesstimates that take the long view on potential increases in wages and the cost of living over 20 or 30 years. Future salaries are often overstated, though they may be understated. Liabilities and fund deficits were all considered when calculating the figure of €780 million.

We are talking about a company that competes in a global market but has turned its back on commitments to past, present and future employees. The company is trying to extract itself from something it thinks will impact on its ability to grow, rather than impact on its ability to live up to commitments to workers. I still wonder whether the State has a policy of encouraging a move towards defined contribution, DC, schemes rather than defined benefit, DB, schemes. If this is a policy it is a regrettable one; if it is not, the State must protect those in DB schemes. That is the nub of this argument.

The IASS has around 15,000 members and this number divides three ways. Some 5,000 members receive a pension, 5,000 are deferred members and 5,000 or more are active members. If the State has encouraged DB schemes to date, it has a commitment to these people, especially as we are talking about a semi-State company. The commitment is greater in the case of a semi-State company than a private company. The State must live up to commitments that were made in writing to workers by companies acting on behalf of shareholders, a major one of which was the State during those years. The State cannot extract itself now on the basis that this is a commercial decision without consequences.

Unions, trustees, Aer Rianta and Aer Lingus all have a say in this - the Minister has a say as she signed an order. However, some 5,000 deferred members do not have a say in this - one third of the beneficiaries of the IASS DB scheme. These people do not have the same right to fair procedures as others, though the right to fair procedures is recognised in law. A person who is denied fair procedures is entitled to an appeal - this was upheld time and again by the then Ombudsman, Emily O'Reilly. The reports over the years show that she encouraged appeals methods to be put in place but deferred members do not have such a mechanism. Decisions are made on behalf of deferred members and they have no input or ability to raise questions - it is a fait accompli. Trustees ride roughshod over deferred members. I raised the question of deferred members when we discussed the last Bill and there must be a mechanism to protect them and give them a right of appeal. It is right that there should be a right of consultation as trustees are supposed to consult deferred members but there is no guarantee it will happen.

I will not delay as I know other Deputies wish to speak on this matter. Amendment No. 19 raises solvent firms, a matter that received insufficient discussion during the debate on the 2013 Bill. The IASS relates to a solvent firm and the Abbey Theatre is another company with similar problems with deferred members who did not have a say in changes to a pension fund. Some solvent firms will use existing pensions legislation to avoid their commitments. For example, the people behind Waterford Wedgewood, the directors and CEO, were solvent yet the company was wound up and the pension scheme did not benefit workers as it should have.

I could say more on this but I am willing to cede time because this debate will adjourn at 7.30 p.m. and I know at least two Deputies from the area most affected wish to contribute.

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