Brendan Ryan (Dublin North, Labour) | Oireachtas source

Thank you, a Cheann Comhairle. I welcome the Leas-Cheann Comhairle who is taking the Chair. These amendments are driven by what is happening to the Irish airlines superannuation scheme, which is affecting airport workers both past and present. The central problem is that the IAS scheme is in the region of €720 million in deficit. I am reliably informed that if the scheme were wound up now, without any resolution on the table, each beneficiary of the scheme would receive approximately 5% of their entitlement. This incredible deficit is a result of the companies abusing the scheme over many years. The scheme was used as a slush fund to get people out of the companies, in actions which could possibly have been outside the law. It was a flagrant abuse of the scheme and the result has left workers, both past and present, in a desperate situation. The trustees of the scheme in particular have really let down the beneficiaries by allowing it to be abused to the point of massive deficit.

There is a proposal on the table for the beneficiaries which would mean winding up the existing scheme and setting up a new defined contribution scheme. This would see the three groups within the scheme face a level of cuts which vary depending on their standing within the IAS scheme. There are three categories of beneficiary: active workers, retired members, and deferred members, which are those who have left the company but have not yet reached retirement age. Each group of beneficiary is facing a cut in their pension entitlement and it would be fair to say that each group would see the cause and solution to their situation in different ways.

The active members are due to take a 10% cut, with retired members in line to take cuts ranging from 1% to 20%, and with deferred members in line to take cuts of up to 60%. The disproportionate level of pain for the deferred members is the result of a complex set of circumstances. However, this does not mask the fact that the deferred members have cause to be especially aggrieved by these cuts. The active workers I have spoken to see this matter as an industrial relations dispute, and they have enacted an industrial relations response through their unions. Retired members see the source of their change in fortunes in the 2013 social welfare legislation which created the law allowing schemes in deficit to include retired members to burden share in order to move schemes out of deficit or when winding up. It was then up to trustees of the scheme to make a decision based on their legal requirement to treat all members equitably. The trustees of this scheme have included cuts to retired members in the winding up proposal for the IAS scheme.

Deferred members feel they are victims of the passing of the 2009 social welfare legislation by the previous Government, which moved the deferred members out of the protections provided to retired members and into the same grouping as the active members. Deferred members are seeking a legislative amendment to place them back within the level of protections which are still afforded to retired members. Some of those amendments are before the House today.

Over the course of this year, I have been working with my colleagues in the Labour Party, from Dublin to Clare, to pursue any possible solution to the matter of the disproportionate hit taken by the deferred members. The Minister will attest to our persistent efforts to find a solution and the various meetings that took place. Through our representations, it has become clear that the one bottom line on this matter is that further money will be required to resolve it in a more equitable manner, but where does the money come from? The companies would argue that they have already provided funds towards a solution in winding up the scheme and setting up the new defined contribution scheme. This is despite shareholder resistance, in particular from one notable shareholder which did not want to give any money towards a new pension scheme. The companies are reportedly adamant that there will be no more money put into it. With no legal requirement that the companies provide any funds at all and the message from the companies that they have already gone as far as they are willing to go, there is uncertainty as to what would happen if the existing proposal on the table was revisited.

If these amendments were to be accepted or passed today, would the trustees be required to share the burden again to make fair the injustice of what has happened to deferred members? What would happen then? Deferred members could achieve further equity, but without more cash the equity would have to come from existing money within the resolution proposal. Aer Lingus workers have already voted in favour of the proposal, so the consequence would be a nullification of that vote and a return to the company to seek a further distribution of funds. I presume that if this were on the table, the active workers would go back to the company and look for more money, similar to what they would lose in a redistribution. How would the company respond to such a move? It is unknown but, given the position the company has taken in the recent past, it is not unreasonable to assume that the company would disregard such a move and play hardball. Would the active members then threaten industrial action? Would this threat work? Would the pressure force the company to provide more money? Would the active members take industrial action? Would this achieve their objectives? If not, and if the amendment ensured that the existing funds be further redistributed among the three groupings, would the active members then replace the deferred members as the most aggrieved group? The question then is whether the State should contribute funds towards the resolution of this dispute.

I am firmly of the view that the State should be strongly active in pushing the companies to provide more funds for the deferred members from outside the current resolution proposals and I believe more time should have been given to try to achieve this. We have reliably been informed that the sum it would take to resolve the matter is approximately €50 million. In the context of the cash reserves within the companies, this is not an extraordinary amount of money. It is possible that, with negotiation, a lower sum might have been acceptable. There is a moral obligation on the companies to act on this matter and provide some solution. For too long they used the pension pot as a slush fund to achieve efficiencies and entice workers out of the companies. They should not get away with it. They have the money to resolve this. The trustees should also be called to account for their lack of action.

There is a lot of uncertainty and many questions for which we do not know the answers. There are roads which could be taken which are risky and none of us knows the ramifications of taking such choices. The deferred members are taking a disproportionate hit and I believe it is incumbent on the companies to find further funds to address this injustice. It is incumbent upon the State to push the companies to find such a resolution. I look forward to the Minister's response to these amendments and to the issues I have raised.

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