Willie Penrose (Longford-Westmeath, Labour) | Oireachtas source

I am glad to have the opportunity to make a short contribution to the debate on this important area of pension law on behalf of the Labour Party. I applaud Deputy Willie O'Dea for introducing the Bill. Pension law is a complex area that needs significant and detailed examination, scrutiny and discussion in order to achieve change. Like everyone else in the House, I do not have a particular monopoly on wisdom or expertise in this area. My Bill was launched on 24 January but I do not care whose is first, second or third. We all have a collective responsibility to ensure that whatever is for the betterment of over 100,000 workers is achieved.

I have done some studying in this area in the past few months. It is an area that has not exercised me legally up to now. I looked at the Pensions Act 1990 and the subsequent amendments. I thought there were three main deficiencies in it. There was a lack of legal obligation on solvent employers to fund pension schemes. All the Bills are trying to achieve that, although they may be coming at it from different perspectives. This racket in which solvent employers can legally walk away from their liability to defined benefit pension schemes, as required under their employment contracts with current or former employees, by simply deciding to wind up a scheme at any time is incredible. They can just walk away. The incongruity of the whole thing, to which Deputy Willie O'Dea referred, must be addressed.

In recent times, we have had a number of very solvent employers with insolvent schemes as determined under the jackass method of determining liabilities and funding standards. In the current climate, with President Trump running crazy over there, inflation about to come back, money being made on bonds and issues like that, the €20 million or €50 million will be eaten away shortly and we will get back to normality, even in the current crazy system of evaluation. Leaving that aside, we have that scheme and unfortunately employees in that situation are left in the lurch. Perhaps they were entitled to €250 but they will end up with €60 or €70 if they are lucky.

We also have the situation referred to by my colleagues involving Waterford Crystal. In that situation, there was a double insolvency because the company and the scheme were insolvent. The State, under the insolvency provisions, had to step in, directed by the court and under European law. Those people had some sort of a scheme. The Deputies are arguing about it being accelerated and finalised, and hopefully that will happen for all the workers, but at least the scheme is there. One should compare that to somebody in the other position. The incongruity of that situation deserves our legislative focus even if nothing else happened. We should forget about some of those smart schemes and the clever accountants and lawyers they have to make sure they are always ahead of the posse. That is the point. It is all possible because most defined benefit pension trustees and rules allow the employer to wind up pension schemes and cease contributions while just ignoring any deficit in the fund of the scheme and its inability to pay the profits. It is most unsatisfactory that an employer's liability - the funded deficit on wind up - is determined solely by the trustee rather than by legislation.

The problem is that the trustees do not even get an opportunity to review the trust deed. The employer is always in the dominant position and that is the problem. The inequity is highlighted by the fact that nearly 100% of employees were not aware that the defined benefit clause of an employment contract was not a binding liability or an obligation on the employer. I have met a number of experienced employers and as far as I could gather they made no effort to bring the relevant clause of the trust deed to the attention of their employees. The fact companies reported the pension deficit as a liability in their audit and public financial statements only added to the employees' belief that their pensions were guaranteed.

My Bill on this area would make a useful contribution to this debate. The accounting standards require an employer to recognise its liabilities to a pension scheme in its financial statement, in other words, in its balance sheet. The way I constructed a proposal in this area was that the liabilities would be removed from the balance sheet, which would have a transformative effect on a company's accounts. Some of the accounts we considered lately - for example, the media companies that have been highlighted and companies in other industries - appeared to be much healthier than what was shown. I was shocked to hear of another company affected in this area in the south. I was getting rid of this facility in my Bill. In other words, if we take the step of removing those liabilities from the balance sheet, that would immediately become a crystallising event. It is a different way of doing it from what is proposed in Deputy Willie O'Dea's Bill but it is same principle. The debt then would be recoverable as a contract debt. It would be removed from the balance sheet but if one was being a smart aleck in doing that, it would not make any difference in that an event has been triggered and it has crystallised the debt. It is important that is achieved in whatever way it can be achieved. The very fact it is not governed by statute law is something we have to be mindful of. There are a number of areas there on which we can work.

The other aspect is the lack of a legal obligation on employers to give notice to the trustees of a decision to wind up a defined benefit scheme. The trustees are being left in the dark. The Minister made a number of reasonable and valid points but it is time to call off this racket where workers and everybody else are being left in the dark. A company could advise the trustees that the scheme was wound up at a board meeting earlier in the day and that it was making no further contributions. In pursuing an employer through the courts, the trustees are currently at a huge disadvantage. If the employer acts in accordance with the trust deed, there is no legislation requiring any notice period but we would not need a notice period if either of those events was triggered.

There is also Deputy John Brady's Bill, which I briefly read. That would trigger the situation and no notice period would be needed. We would have sorted it out and would have circumvented people who are trying to circumvent their obligations. We would have neatly snookered them, and that is our job. It is no use having shareholders running off and smiling and 110,000 workers being left in the gap.

I know what the Minister said and he is probably in the right place on this. He has got legal advice but we could also put our collective heads together. I acknowledge the work done by Deputies Willie O'Dea and John Brady and I wrote a letter to them. The Minister has a pensions Bill coming forward and we have the draft heads of it. If we do not catch him in the swings, we will catch him at the roundabouts. I am going to convene a forum with Deputies Willie O'Dea and John Brady and bring in the NUJ and all those affected by this. There are other companies in the south which have also been affected, and we can work this out in a collective way. I know the Minister will park this Bill but he will not park the pensions Bill that is coming forward and we will get an opportunity to contribute to the discussion on the heads of it. If the Minister brings forward a Bill, we will make our submissions at that point, impart our collective wisdom and in that way we will make an advance on this. We will send a signal to workers that this is not on. We do not want to land them into any difficulty. The Minister said the cure could be worse than the disease. I understand what he is saying, but there is a way around that. It is up to us to ensure that whatever legislation we introduce in this House is effective and meets its objective, which is to protect workers and ensure we do not see them skinned of moneys that they paid into schemes.

The Minister is trying to bring forward a universal pension scheme and I support him 100%. He is right on that and I hope that will be a good legacy of his but how can he encourage people to pay into schemes in that situation when they are looking at the publicity surrounding what is going on. I am referring to the scandal of people running away from their obligations and it is not the workers who are running away.

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