Michael D Higgins (Galway West, Labour)
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Question 50: To ask the Minister for Social and Family Affairs if his attention has been drawn to the announcement that the country's largest pension scheme, the construction federation operatives pensions scheme, is to be closed from 1 July 2006 with members transferred to a new scheme; if he has sought assurances regarding the effectiveness of the replacement scheme, in view of the fact that one in six male workers here will be affected; and if he will make a statement on the matter. [22982/06]

Séamus Brennan (Dublin South, Fianna Fail)
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The construction federation operatives pensions scheme operates as a registered employment agreement under the Industrial Relations Acts. There is a statutory obligation on employers to register eligible employees in the scheme and pay the necessary contributions. Since its inception in 1965, the scheme was a defined benefit scheme with flat rate contributions and benefits, which could only be indexed by direct agreement between unions and employers each year. It is understood that after an extended review process between employers and unions, it has been agreed to introduce a new scheme, the terms of which were registered with the Labour Court on 19 May 2006 under the requirements of the registered employment agreement.

Generally speaking, I do not favour the replacement of defined benefit schemes with defined contribution arrangements because defined benefit provision best serves the interests of employees. While the Government has been critical of high profile and profitable enterprises which have chosen to close their defined benefit arrangements to new staff, the position of the construction industry scheme is different in a number of respects. First, it appears the changes proposed have been agreed between the parties concerned after prolonged review and discussion, with an agreement registered with the Labour Court. Second, the benefits available under the old scheme were flat rate payments which, unlike most defined benefit arrangements, were not related to previous earnings. The value of these benefits has also been eroded over the years as a result of the non-indexation of benefits and contributions.

While the previous scheme had been a defined benefit scheme, the scheme sponsors consider that the new scheme will be more beneficial to scheme members for a number of reasons including that contributions to the scheme will be higher; a retiring worker will have an option to take 25% of his accumulated fund as a lump sum, whereas heretofore the lump sum paid was equivalent to about one year's pension, which was up to €4,500; annuities will be provided in-house rather than buying them on the open market, which will give better value for accumulated funds; death in service benefits will be better as spouses will receive not only the €63,500 lump sum available at present but also the accumulated value of the individual's pension fund; workers will have choices in how to apply their accumulated funds ranging from a fixed pension with no indexation and no surviving spouse's benefit to an indexed pension indexed at 3% per annum with a 50% surviving spouse's pension; and where a member's remaining fund, after taking his or her 25% tax free lump sum, is less than €15,000, the member will be offered the option to fully commute his or her pension to a lump sum payment.

Additional information not given on the floor of the House.

Occupational pensions in Ireland are voluntary arrangements and, as such, employers can change the terms of these arrangements. I am aware there are many pressures on defined benefit schemes emanating from the need to pre-fund and meet the requirements of accounting standards FRS17 and the funding standard under the Pensions Act. While some employers have taken unilateral action to change their pension schemes, the changes proposed in the construction industry scheme have been agreed after extensive discussions and it appears the change may be to the advantage of workers in the industry.

Willie Penrose (Westmeath, Labour)
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Is the Minister satisfied that the construction industry has thus far complied with its obligations under what is a registered employment agreement, a sacrosanct agreement between workers and employers? Is he satisfied with the level of transparency in the current scheme? Last year, SIPTU was compelled to raise significant concerns regarding the operation of the industry confederation's pension scheme which did not cover up to 50% of the relevant workers. Should the Minister not have been concerned that workers who work hard from early morning until late at night were not covered by their pension scheme? Ultimately, employers benefit most from the work of their employees and generally get fat on the backs of working people rather than from materials. I understand 80,000 of a membership of 120,000 contributed to the scheme.

Is the Minister satisfied the new scheme will ensure the registration of all employees, the proper payment of deducted contributions and the eradication of the unethical practices about which the Pensions Ombudsman, Mr. Kenny, complained last year? Too many employers force their workers to pretend they are self-employed — C45 men and women — in order to circumvent PAYE regulations intended to ensure employees are paid benefits when they become sick or retire. It is time to call a halt to those who are eager to exploit the Celtic tiger. Is the Minister satisfied that such exploitation will not be possible under the new scheme?

A matter pertaining to defined benefit pensions was brought to my attention by a person in Cork. Some trustees of schemes claim to be entitled to override the rules of schemes by the application of section 48(3) of the Pensions Act 1990. Is it not important that Acts passed by this sovereign Parliament do not allow anybody to override any part of the deeds of a trust? Section 48(3) of the Pensions Act should be examined in that context.

David Stanton (Cork East, Fine Gael)
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Further to the Minister's statement that failures to remit deducted contributions are offences and would be investigated, how many such investigations are ongoing? Has he brought his proposals for tax clearances on pensions and benefits to the attention of his Cabinet colleagues?

Dan Boyle (Cork South Central, Green Party)
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The Minister will be aware the Revenue Commissioners have committed to investigate the construction industry with regard to uncollected taxes and PRSI payments. Does the Minister agree it would also be in order for his Department to undertake a parallel investigation into other aspects of the industry?

Seán Crowe (Dublin South West, Sinn Fein)
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Does the Minister believe this new scheme will be more effective? Is he aware of the difficulties within the construction industry with regard to employers who force workers to describe themselves as self-employed when the reality is quite different? BATU has been involved in efforts to eliminate this practice because it believes scams are being perpetrated within the industry. However, the situation seems to be getting worse rather than better.

Séamus Brennan (Dublin South, Fianna Fail)
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In the long run, the scheme which has been agreed between employers and employees will be better for workers and their families. Currently, approximately 65,000 people are in the scheme, while 80,000 are eligible to join it. Deputies will be aware that a high degree of self-employment exists within the industry, which in itself causes further difficulties.

I have suggested that employers who do not remit funds or comply with legislation should not be awarded State contracts and I continue to hold that view. I have held discussions with the Minister for Finance in that regard and understand he is planning to introduce new standard contracts for public sector building projects later this year. These contracts will require contractors to ensure pay and conditions of employment fully comply with the law and that pension terms are no less favourable than the pension terms included in the registered employment agreement. Combined with the new pension scheme, the contracts will be of considerable benefit to the industry.