Finian McGrath (Dublin Bay North, Independent) | Oireachtas source

I thank Deputy Willie O'Dea for raising this very important issue. I apologise on behalf of the Minister, Deputy Regina Doherty. I am stepping in for her today.

I am very much aware of the concern highlighted by the announcement of the closure of the Irish Life pension scheme to future accrual. It is common knowledge that the scheme is very financially secure and that is assets adequately cover all liabilities that will arise in the event that the trustees take a decision to close the scheme. However, the closure of the scheme does not mean that its members will not receive pensions. First, the pensions accrued to date are secure. Additionally, those members concerned will also be beneficiaries of the new defined contribution scheme to which the company is contributing for them. Even where a scheme is closed to new members or to future accrual of benefits, the sponsoring employer's role continues in respect of that scheme. Finally, members will receive the level of contributory State pension commensurate with their social insurance contributions once they reach pension age.

It is important to note that neither the Minister for Employment Affairs and Social Protection nor the Pensions Authority has the power under existing legislation to intervene to freeze the winding-up of a scheme or to compel the employer to make contributions to a scheme. As we all know, the number of defined benefit, DB, pension schemes has declined in recent years. The decline of DB schemes accelerated during the financial crisis to the extent that the whole pension sector was possibly at risk. In recent years the Government has amended pension legislation to protect the pension sector and ensure fairer and more equitable outcomes for all members of schemes.

Almost all Irish DB schemes have a rule that allows the employer to cease making contributions, usually after a notice period. At present, there is no legislative obligation on the employer to make contributions and no further liability on the employer where contributions cease. Neither is there an obligation on the employer to give notice to members or to consult in advance of ceasing contributions. However, in circumstances where a restructuring of benefits is proposed, pensioners, deferred scheme members and unions must be kept informed by trustees. Furthermore, changes made in 2015 require trustees to notify groups representing the interests of pensioners and deferred scheme members in a scheme in such a situation.

The roadmap for pensions reform, which was published recently by the Government, details specific measures that will modernise our pensions system. Under strand 4, entitled "Measures to Support the Operation of Defined Benefit Schemes", the roadmap sets out that the Government is committed to advancing the Social Welfare, Pensions and Civil Registration Bill 2017. The purpose of the defined benefit pension measures in this Bill is to respond to the ongoing difficulties in schemes and to increase protections for members as well as encouraging employers to ensure that schemes are funded and managed well.

As Deputy O'Dea is aware, the general scheme of the social welfare and pensions Bill 2017, which is now the Social Welfare, Pensions and Civil Registration Bill 2017, was published in May 2017 and proposed a number of key measures relating to defined benefit pension schemes. To ensure that an employer cannot walk away from the pension scheme at short notice, it is proposed to provide a 12-month notification period where an employer seeks to cease making contributions to a scheme. In order to seek a middle road between the current position, whereby employers can abandon DB schemes, and full and immediate debt on employer provisions, it is proposed that, where a scheme is in deficit and a funding proposal is not put in place in a timely manner, the Pensions Authority be allowed direct steps to be taken to ensure that the scheme meets the funding standard. The general scheme also proposed more frequent monitoring of the financial position of schemes.

It is important to note that if this new legislation is enacted, a scheme will have to give a minimum notice period of 12 months before contributions can be stopped. However, provided the scheme meets the minimum funding standard, it will not prevent a company from ceasing contributions once the minimum notice period is served. These proposed legislative provisions are quite technical and very complex.

Work to finalise them is at an advanced stage. The Department hopes to be in a position to bring forward the amendments on Committee Stage at the end of May or in early June. It hopes that, with the co-operation of the Oireachtas, it can pass the legislation before the summer recess.

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