Darragh O'Brien (Dublin Fingal, Fianna Fail) | Oireachtas source

Deputy Brady's contribution is on the record and I would appreciate if the Deputy would allow me to make mine.

The fundamental reality is that there is only a certain amount of money to spend and it is a matter of prioritising how that can best be used. This Bill goes some way in examining and reassessing the balance and trying to provide the moneys that are badly needed in certain areas. Much more could be done and I have highlighted some of those issues.

One area I wish to focus on is how little the Bill does to address the area of pensions, especially pension provision. I completely disagree with Deputy Pringle in his call for reducing pensions tax relief to the standard rate of 20%. Other parties agree with him and they fly the ridiculous kite in saying that pension tax relief is focused on the higher earner but it is not. It is focused on middle income earners. If the Government was to reduce the pension tax relief to the standard rate of 20% we would be effectively looking at a €560 million tax increase for middle income workers, both in the public and in the private sector. We as a party would not want to see that happen.

There is very little set out in the Bill on pensions. The 2013 Social Welfare and Pensions Act introduced by the previous Government brought in what are called single insolvencies, which means that a profitable private company can wind down its pension scheme and effectively unilaterally remove their pensions scheme members from the existing pension scheme arrangements. That is a dangerous precedent to set when a Government is trying to increase pension provision and pension coverage to get workers to make provision for their retirement. Why would they make provision for their retirement when certainty in regard to the pension benefits that may accrue to a worker on retirement are removed? The Government should seriously consider reversing the single insolvency arrangements on Committee Stage. If a company and its pension scheme are insolvent, we understand the scheme would have to be wound down.

I would cite the example of the Irish Aviation Superannuation Scheme, IASS, the airport pension scheme. For the first time in the history of the State a Government legislated to reduce benefits in a private pension scheme. That was done under the State Airports Act in the period 2014 to 2015. It had the effect of reducing pension benefits for long service deferred pensioners by up to 60% - people with long service approaching retirement. We spoke about giving €5 a week back to contributory and non-contributory pensioners, which is fine, but people who had contributed to this private pension scheme had their pension payments reduced by six weeks a year by way of legislation. Those were substantial changes.

Single insolvency arrangements should not be permitted. No pension scheme should be allowed to wind down unless it has reached a 90% funding standard, and I would ask the Government to examine that. The previous Government has given employers, particularly those who have defined benefit schemes, a clear roadmap as to how they can get out of contracted arrangements and wind down those schemes, and the people who suffer are the pension scheme members.

To return to the example of what happened in the case of the airport pensioners, when the previous Government passed the Social Welfare and Pensions Act 2013 and the State Airports Act and the President had signed them into law, a week later IAG made a revised bid to purchase the remaining 25% stake in Aer Lingus. It did that because the legislation that was passed by the previous Government effectively wrote off €800 million of a deficit in that pension fund, a fund that the trustees and the company had run up and doubled over two years because they knew what the previous Government was going to allow them to do so. There are two court cases pending. If it cannot be done in this Bill, the Government must seriously examine producing a separate pensions Bill.

This Bill is very light on pensions legislation, pension regulation and how we can improve pension coverage. The only way that can be done is to give legal certainty to people who have paid into a pension scheme and then saw up to 60% of their benefits removed.

People coming up to retirement with 35 or 40 years' service thought they had a pension entitlement of €30,000 to €40,000 and it was reduced to €12,000 to €14,000. It is absolutely outrageous. The Government should try to undo the damage it did with the legislation I have mentioned already. Will the Minister of State ask his colleague, the Minister for Social Protection, if the Government is planning to produce a separate pensions Bill to deal with the areas of single insolvencies that should not be permitted and the area of pension scheme funding? The OECD's report on it and the recommendations that have been given say that no scheme should be able to wind down unless it is 90% funded because at least then there would be a decent dispersal of the assets. What will happen now is that many of our commercial semi-State companies and many of the larger companies out there that have historical defined benefit pension schemes will wind those schemes down. Thousands more workers will go through what the airport pensioners and airport pension scheme members went through. There are 15,000 workers in that sector made up of 5,000 active members who were removed from the scheme without their permission, which was facilitated by legislation passed by the previous Fine Gael and Labour Government; 5,000 deferred pension scheme members who lost up to 60% of what they had been promised at retirement; and 5,000 retired members who have lost six weeks of their pension each year because of what was done. A pensions Bill would provide us with an opportunity. I have discussed bringing forward a pensions Bill with my colleague, Deputy Willie O'Dea, to right the wrongs that were done over the last few years. I will ask the Minister on Committee Stage to look at specific arrangements that can be put in place to ameliorate the decreases in the pension that the IAS scheme members suffered as a result of previous legislation. When I asked about this by way of parliamentary question, the Ministers, Deputy Noonan and Deputy Ross, said they could not just pick out one cohort of workers and look at giving them some degree of restitution. I asked the Minister at that stage why he picked out just one specific group of pension scheme members - the 15,000 I mentioned - by bringing in specific legislation to reduce their pension scheme benefits and move them out of their scheme without their permission. That is what happened with the State Airports Act. For the first time in the history of the State, legislation was brought in by a Government to reduce pension benefits in a private pension scheme, specifically that scheme. It was done to facilitate the sale of the State shareholding in Aer Lingus. The State got €342 million for that. It did not put any of that money back into the pension fund. It set up a connectivity fund. I would love to know what is happening with that. I will ask the Minister for Transport, Tourism and Sport, which I have done, about where that money is being used. My point is we have left people high and dry. We need a pensions Bill to address these issues not only for these 15,000 workers but for those who the same thing will happen to as a result of the Social Welfare and Pensions Acts of 2013 and 2014. Those Acts facilitate companies to backslide out of their responsibilities. It facilitates a situation where a company can run down its pension scheme. They have a roadmap now to run the scheme down, submit an application to the Pensions Authority to wind down their scheme and transfer into defined contribution arrangements. It is not something we should facilitate. I do not believe any Government should facilitate it. I ask the Minister of State to bring that back to his colleague, the Minister for Social Protection. I will raise it on Committee State through my party colleague, Willie O'Dea. Will the Government give a commitment to look at moving a separate pensions Bill so we could work across the House on issues like that?

Deputy Pringle talked earlier about reducing pension tax relief to the standard rate. It is a joke. It is all very well to go out and say to people that higher earners benefit most. The vast majority of people who claim pension tax relief are in the middle ground; they are normal workers, men and women, who are out there making provision for their retirement. If we did what Deputy Pringle and others on the left want and reduce the pension tax relief to 20%, it will effectively increase tax on those people by nearly €600 million a year. If one looks at the issue of Garda and teacher pay and all areas in the public and private sector, by changing the pension tax relief from a marginal rate to a standard rate it would wipe out any increases that have been given and more - it would reduce take home pay substantially. That needs to be called out very clearly with the hard left, the PBP-AAA, and all these people who say that pension tax relief is for wealthy people. It is absolute nonsense. In a pensions Bill, the Government could re-state a commitment to retaining pension tax relief as it is. It could go further and change the way pensions are structured. They could be changed from just being an annuity scheme or saving scheme to a lifelong savings scheme. People could access elements of their proposed tax free cash into the future to pay down debt in certain instances or to take some moneys out, perhaps to put a deposit down on a house. Our legislation and regulations are far too rigid at the moment in that regard. There could be a penalty for people to do that which the Exchequer could benefit from. At least it would mean that people have flexibility with their fund. I have met a number of people who, through the very difficult years and before that, had actually made provision and had sizeable amounts of money in pension funds. They were broke but could not reinvest in their business because the money was sitting under trust. There could be a situation in certain instances where people could access an element of their tax free cash. They could not access their annuitable amount but an element of their tax free cash in certain instances. Government needs to look at changing the way pensions are structured by changing them to lifelong savings plan. If a life event happened, they could access some of those funds with the permission of the Revenue. That would make it much more attractive for people to pay into pension funds and join pension schemes. They will only do that if they are certain this Government, like the last one, will not take the legs from under them and pull the rug from under them when they have been paying in for years as in the example of the IAS scheme members who had up to 60% of their benefits taken. Imagine if that happened to anyone in any other sector.

I ask the Minister of State to bring those comments back to the Minister for Social Protection. We need a separate pensions Bill to right the wrongs of the previous Government and to improve pension coverage across the country. The future pension liability to the State is multiples of what the banking debt was. There is an issue and a pensions time bomb. People are sick of hearing about it but the reality of it is that one way or another, one Government or another will have to tackle this at some stage. From 2025 to 2035, there will be a situation where it will be very difficult, if not impossible, for the State to pay its State pensions and the pensions for its public and civil sector workers. A worse situation is that of the people in the private sector who have not made provision for pension benefits. They will fall within the State remit. We need to get serious about this issue. I ask the Minister of State to bring those comments back to the Minister.

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