Clare Daly (Dublin North, United Left) | Oireachtas source

That is not a problem. I agree with Deputy Shortall that there is irony in the fact that we are discussing this only because the Minister wanted to move changes in the scheme relating to pensions. When we tried to do so on Committee Stage it was deemed out of order. This is an urgent situation and, even though it is late in the day, the Minister must start listening. The Minister met pensioners in the airport groups but there is a perception that the Government is not listening enough - it is more than a perception; it is a reality. The people involved had no choice but to participate in this pension scheme, given their conditions of employment. Their colleagues in the UK and the US who work for the Irish national airline have secure pension rights but those who gave a lifetime of contributions to this pension scheme face cuts to their living standards on the scale outlined by the other Deputies.

In these amendments we seek to deal with cases where defined benefit pension schemes have funding problems. We accept that funding problems exist and it is appropriate to use the example of the IASS but this only covers half the question. The question is, if there is a problem with funding, who will pay to solve it. These amendments highlight the fact that the current scenario, where workers and their families pay the price of something that was not their problem to begin with, is unfair and somebody else should bear the cost. The "somebody else" in this situation is the employer. We do not say this lightly but based on a number of serious and important precedents.

The first precedent was mentioned earlier. Previous rulings in the High Court, by the likes of Mr. Justice Murphy, deemed the IASS to be a contingent creditor of Aer Lingus.

This judgment stated that Aer Lingus owed the scheme €500 million in a contingent liability. Of course Aer Lingus is only one of the employers in the scheme. As everyone knows, the amount of moneys being put in to the scheme by the employer is nothing near €500 million. In fact, no money is being put into this scheme at all. Rather, the employers are taking money and putting it into a different pension scheme to benefit some of the current employees.

There is serious legal precedent to be considered and unless the Government addresses and listens to what Members on this side of the House are saying then, as Deputy Shortall said, it will end up in legal action, which would be regrettable for everyone. No one needs the stress and the expense of that scenario.

There is more than legal precedent to support our argument, including the fact that the company sought to release people. In many instances this was a factor in people leaving the company early and part of the reason some of the strains were put in, if I can put it like that. The employers chose to have new entrants join a different pension scheme rather than this scheme even though participation in the scheme in question was a condition of employment previously.

Someone must be called to account. The other Deputies are right to highlight the case of the deferred pensioners. I will advert to them presently but existing pensioners will take an immediate hit come 1 January. This group of people will face a six-week per annum cut in their living standards from 1 January. They are already subject to the pension levy of 2.53%. At issue is a substantial amount of money coming out of an average pension of approximately €15,000. Furthermore, active pensioners will be in a far less favourable position as well.

Why is this pension scheme in trouble? It is not because of the actions of these people and their families. In fact, many took the step, on the encouragement of the company, and left early as part of the package that guaranteed them a particular pension when they retired. They did so because these were reputable State companies and they thought they had a right to believe in what was said to them. The company saved a good deal of money as a result of these people leaving early. There is a misunderstanding in respect of the deferred group. Those in the group are treated as if they had short service and went on to fulfil an alternative career in some other employment or perhaps had access to another pension fund, but that is not the case. Many of these people have contributed decades of work. Some of these amendments seek to deal with the issue of recognition of long service. This is critical because currently those people are decidedly exposed.

These people are not to blame for the situation. Could we paint a legitimate argument that other people are? I believe we could. I wish to put on record that some of the investment decisions taken by the scheme must be questioned. The Minister for Social Protection and the Minister for Transport, Tourism and Sport should initiate this process. Let us consider the facts. In 2001 the employers advised the trustees to enter a freeze and de-risk strategy and this was implemented. At the time, what, in the interests of etiquette, I can only describe as bizarre investment decisions were made. The trustees invested €800 million in Irish Life. Fully 57% of the scheme's money was tied up in Irish Life. Why? That is against all best actuarial advice, which holds that a pension scheme should diversify. Furthermore, it was against the particular actuarial advice which stated that the property portfolio should be 9%. The trustees brought it down to 0.5%. They were told that the equity portfolio should be approximately 41%. In fact it was 0% and instead they opted for fixed interest securities. They switched hundreds of millions of pensioners' money to Irish Life investments between April 2012 and April 2013, at a time when there were question marks over the future of Irish Life. Two of the three trustee directors have held senior executive positions in Irish Life, a definite conflict of interest given the hundreds of millions of euro in funds owned by the pensioners in those companies. Against actuarial advice they sold an equity portfolio worth €667 million. We have used the examples previously, but a unique, probably unrivalled, property portfolio in the centre of Dublin was sold for €58 million in 2013. It included the Passport Office on Molesworth Street, 15-16 Baggot Street, St. Stephen's Green properties, the European Commission office on Molesworth Street and a block of the Harcourt Centre as well. Property previously valued at €130 million with a considerable rental income was sold for €58 million in 2013.

Jones Lang Lasalle, which was involved in the transaction, was the property adviser to the IASS pension scheme. It was the selling agent for the property. It was the valuation agent for the company that bought it and, finally, the firm was located in one of the buildings. One could not make up the extent of the conflict of interest. Furthermore, Irish Life was an investment adviser to the IASS.

While I recognise that there are problems in the scheme, it is not the fault of the people who we are asking to pay the price. I appeal for an investigation into what went on with our funds. I say "our funds" because I am a member of the pension scheme as well, having been an employee of Aer Lingus. It makes me sick to think that people who gave a lifetime of work to what was the State airline and those who worked in the airport authorities and SR Technics are being treated in this way. Unless we attend to this and deal with these amendments then they will pay the price for something that was never their problem to begin with.

I re-emphasise the points made by the other Deputies about the lack of involvement in this process. It is sickening that pensioners and deferred members had no access to any of the discussions that went on around the expert panel. Union members had a vote on the matter, but those union members in the companies now are not members of the IAS scheme. They participated in a ballot and that is being used to suggest that workers were consulted. The resulting decision will leave people with six weeks less pay come 1 January. It is simply not good enough. The pensioner group has had no funds put into the scheme to mitigate the impact for them.

Amendment No. 21 tabled by myself and Deputy Joan Collins suggests that length of service should be given a weight and should be a factor in terms of actuarial factors in the table. This can be done and we had thought that it would be done when we discussed the matter in the context of previous legislation. Unfortunately, that did not materialise in the guidance notes that followed. This aspect must be factored in because we could have a scenario whereby the pensioner group is exposed to further liabilities and cuts in future.

I know other Deputies want to contribute and that we are coming near the end of this stage of the debate. This is a last-minute appeal to the Minister. There are problems but there are other solutions. There is never only one way to deal with a scenario. The Minister must consider the points that Deputies here have made. We are saying that those who did not create the problem are having to pay the price. This will end up in the courts, resulting in unwarranted stress and hardship for people who had a right to expect something different. They had a legitimate expectation, that has been backed up in other legislation and one that has been given to their colleagues across the water who work for the same companies. Surely we can come up with something better rather than making these people pay.

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