Eamon Scanlon (Sligo-Leitrim, Fianna Fail) | Oireachtas source

I congratulate Deputy Willie O'Dea on proposing this Bill, which will provide greater pension protection for employees and ensure solvent employers are not able to walk away from their obligations. In 2014, an OECD report highlighted the need for beneficiaries to receive greater protection when defined benefit schemes wind up. According to the OECD report:

Another weakness of Irish legislation is that it allows healthy sponsors to "walk away" from DB pension plans, shutting them down, without creating a high-priority debt on the employer, as is the case for instance in the United Kingdom. Under the UK's "debt upon employer obligation", the sponsor's debt (if the plan is underfunded) is determined by valuing the benefits on the basis that they are bought out in full via immediate annuities (for pensioners) or deferred annuities (for non-pensioners).

The Minister needs to get real on this issue. He has indicated during Dáil debates that he has no plans to introduce legislation, even though it is abundantly clear that legislation is required and has been for some time.

Many company employee schemes have been wrapped up by employers. I am sure other companies are licking their lips as they watch what is going on in cases like Waterford Crystal, Aer Lingus and Independent News & Media and wonder what is going to happen. That is why legislation is needed. Defined benefit pension schemes have been in funding crisis for a number of years. Many schemes do not meet the required funding standard because of the worldwide market turmoil since 2007. It is reported that 30% of Irish schemes do not meet the funding standard. Other causes of this shortfall include increased life expectancy, the increased cost of buying annuities for pensioners and the rate of increase of final salaries. In essence, the projected assets do not meet the projected liabilities. As a result, many defined benefit schemes have been closed off to new members.

The Bill aims to address the issue of solvent companies closing defined benefit pension schemes to the detriment of scheme members. At present, Irish legislation does not require an employer that initiates the closure of a scheme to ensure it is brought to a level of full funding, as is the case in the United Kingdom. Under-funding is a debt which can be legally enforced. Our view is that profitable firms should not be allowed to walk away from defined benefit schemes. I hope this legislation is not too late. I congratulate Deputy Willie O'Dea on its introduction.

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