Róisín Shortall (Dublin North West, Social Democrats) | Oireachtas source

On behalf of the Social Democrats, I am happy to support the Bill before us. I hope it will be carried to allow it go forward to Committee Stage because this is an area that has been neglected by the present and the last Governments. It is hard to see any circumstances in which it is defensible that a profitable company that has entered into a contractual arrangement with its employees to maintain a defined benefit scheme should be allowed to renege on that commitment and walk away from the agreement with promises to its workers. This situation has obtained for some time and has come up on a regular basis, particularly in the context of the annual social welfare and the social welfare and pensions Bill. There have been various attempts to close this loophole, which the present Government resisted a few months ago and by the previous Government. I was looking at notes in my office. Deputy O'Dea will be familiar with the amendment to the then Social Welfare and Pensions Bill that several of us put our names to in 2014, stating a sovereign firm shall not be allowed to close a defined benefit pension scheme except where the scheme has reached a minimum of 90% funding standard. The then Tánaiste and Minister for Social Protection argued vehemently against the amendment and refused point blank to give it any serious consideration. It is somewhat ironic that the then Tánaiste's party comes along with Deputy Willie Penrose's Bill. I heard Deputy Willie Penrose making the case and he has received a lot of publicity for various press statements issued in his name saying he was going to sort out this problem. In 2014 when the Labour Party was in a position to do something about this it refused to accept that amendment. There is a big element of crocodile tears on Deputy Willie Penrose's part. Others, however, who put their names to that amendment still fight the good fight in respect of what many of us believe are the State's responsibilities to ensure that they uphold the rights of workers in companies where there is no excuse for them to renege on pension commitments other than the fact that there are funding difficulties in the pension scheme. The company may be solvent and doing well yet our Government seems to think it is perfectly acceptable for a company in those circumstances to walk away. Most right thinking people do not accept that is all right and think companies should not be allowed to do this.

Solvent companies in other jurisdictions, particularly in the United Kingdom, are not allowed to shirk their responsibilities and renege on their commitments in this way. The sky has not fallen in as a result of this in the United Kingdom and there is no reason we should not have the same kind of regime in this country and place the same obligations on profitable employers to uphold the commitments they have given.

The point was made that if Government moved to prevent companies walking away from their defined benefit commitments a flood of companies would do that and attempt to close down schemes. These matters must be dealt with properly and cleverly, and the Government by right, if it was of a mind to address this loophole in our pension law, would move to do that very speedily and avoid giving notice to companies and so encouraging them to wind up their schemes. It is possible to do it and that was done in the United Kingdom. There is no reason that should not be the case here.

The Government is standing idly by and allowing companies do this to their workers, which is not only a serious injustice to workers who have paid into a defined benefit scheme for 25, 30 or 35 years, leaving them high and dry, but also has implications for State funds because many who lose their defined benefit pension have to claim a non-contributory pension from the State. Once again, the State is picking up the tab for the failure of regulation of private sector companies and that should not be allowed because it is another form of bailout. Overall, the Minister has been exceptionally quiet on pension policy. In response to a recent parliamentary question of mine he referred only to State pension provision.

My understanding has been that even though the Minister for Social Protection is supposed to have responsibility for pension policy, a kind of good cop, bad cop game has always been played between that Minister and the Minister for Finance, who decides when it comes to budget time on the kind of pension tax relief that is allowed and whether it is to continue. Perhaps this has changed.

We have an extremely unfair pension system in this country. We spend over €2 billion on tax relief to assist those who are in a position to put away substantial pension funds. Their handsome pension pots are being subsidised, in effect, by people who cannot afford to make pension provision for themselves. It is entirely unfair that 80% of pension tax relief is benefiting approximately 20% of pensioners. We were promised severe restrictions in this regard. Some restrictions have been introduced, but they are nothing like what was promised. The previous Government undertook to ensure nobody with a pension of more than €60,000 would be able to benefit from pension tax relief. Unfortunately, that has not been the case. Many people with pensions in excess of that figure are still benefiting from tax relief.

I welcome the Minister's thinking on the need for the State pension to become the mainstay of the pension regime. We need to move from the huge cross-subsidisation that exists at present, which ensures those who are better off in society, by and large, are subsidised by people on much lower incomes. The entirely unfair regime that is currently in place is yet another regrettable example of how private sector pensioners are being denied the kind of protection they should be receiving from the State. I am happy to support the Bill in that context.

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