Joan Burton (Dublin West, Labour) | Oireachtas source

I thank Deputy Willie O'Dea for tabling these two amendments. It is important to note that the decision to wind up a defined benefit pension scheme does not rest with the sponsoring employer. It is a matter for the trustees of the pension scheme. The trustees of pension schemes are duty bound to act in the best interests of all the scheme members regardless of their other roles and duties. Defined benefit pension schemes in Ireland are set up and maintained by employers on a voluntary basis. There has never been a statutory duty on employers to contribute to the pension scheme but employers have, by and large, made great efforts to support and deliver on the promises made to scheme members in defined benefit schemes.

The effect of the proposed amendment would be to place a statutory duty on an employer to secure scheme funding levels. Imposing significant additional costs on employers at this point could have a negative impact in respect of the financial health of businesses and the keeping of existing jobs given the extra costs involved. It could also possibly trigger the closure of pension schemes. Indeed, in certain circumstances, it could possibly trigger the closure of the company. I appreciate the intent of the amendment is to protect employees' pension entitlements but it is important that we examine what other consequences may flow from such a change. We have to reflect on issues which relate to the financial health of the business, job creation and retention and the possible effect on pension schemes. Defined benefit schemes have been experiencing difficulty across the world, in particular in Europe where they have been a marked feature of post-war Europe for many employees and have been very valuable.

The reality is that when Deputy O'Dea's party was involved in crashing the economy, we lost 330,000 jobs. Yesterday is the first day since December 2008 that the number of people employed in Ireland has increased to just 17,000 people shy of 2 million people. Nearly 2 million people are now back at work. Deputy O'Dea knows that we inherited an appalling situation from his Government. Unfortunately, in that appalling situation of thousands of firms closing, chaos and terrible stress, many pension schemes got into dire difficulties. We spent the past number of years trying to rescue those schemes and many of them are now in much better financial health and have a much better future, although many companies closed their defined benefit schemes to newer and younger employees and have concentrated on defined contribution schemes.

I appreciate what Deputy O'Dea is saying. We are a significant way along on the road to recovery and although that recovery and stability is spreading out now, the impact of Deputy O'Dea's proposals could have unforeseen and negative consequences on jobs and could put some pension schemes at risk. Many good employers in Ireland - not to mention their employees and the contributions they made - have contributed strongly to defined benefit schemes. They have done their best to help the schemes return to a viable position. I will not agree to the proposed changes. The unknown consequences could be significant for firms and, perhaps, employees involved in the pension schemes and, in particular, for employment.

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