Dáil debates

Wednesday, 7 October 2009

Priority Questions

Pension Provisions.

1:00 pm

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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Question 101: To ask the Minister for Social and Family Affairs the reason for the delay in bringing forward a framework for pensions policy. [34913/09]

Photo of Mary HanafinMary Hanafin (Dún Laoghaire, Fianna Fail)
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The Government is aware that wider and longer term pensions issues require a comprehensive and co-ordinated response. Following the conclusion of the successful consultation process last year, we have been considering options to address the challenges facing our pensions system which were raised in the Green Paper process. These issues relate to social welfare pensions, the sustainability of our pension system generally, the adequacy of current provision and other complex issues around regulation, public sector pensions and retirement age.

In the past year, the economic environment has changed considerably and we need to ensure that decisions we make in the pensions area are robust enough to withstand new and unprecedented challenges. The recently published McCarthy report and the report of the commission on taxation both considered pensions issues, albeit from a different perspective. In bringing forward its proposals for pensions provision in the future, the Government will have regard to the issues raised in these reports as well as the options proposed in the Green Paper and the follow-up consultation process.

In the meantime, we have been responding to the immediate difficulties facing employees, particularly those in defined benefit schemes whose companies and pension schemes faced difficult situations as a result of collapse in equity values and the economic situation. The Government has moved quickly to protect people's entitlements through the measures announced last December and the amendments passed in the Social Welfare and Pensions Act 2009. These measures include the establishment of a pensions insolvency payment scheme, a reordering of wind-up priorities, provision for restructuring of pension benefits and stronger regulation with regard to remittance of pension contributions.

It is entirely appropriate that the Government should take the time to arrive at sound decisions about the future of our pension system given the potential of such decisions to significantly impact on this and future generations. Our objective is a system which will deliver an adequate retirement income for all which is at the same time affordable and sustainable for the State and those who sponsor and provide pension schemes.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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It is reasonable to say that time is needed to prepare a policy on pensions but we are approaching the second anniversary of the publication of the Green Paper on pensions. Since the beginning of this year, Deputy Enright and I have sought to know when the framework will be produced. During the early months of the year, the Minister repeatedly assured us it would be a matter of weeks but these assurances seemed to die a death. She is quoting from other reports and documents but what is she doing about the matter? She is responsible for pension policy and has had two years in which to draw up a White Paper on pensions. In the meantime, thousands of people are finding their pension provisions are completely inadequate and there is no initiative from the Government. The steps to which she referred are merely scratching the surface. I ask her to tell us the reason for the delay in bringing forward the long-promised pensions framework and the month in which we can expect it to be published.

Photo of Mary HanafinMary Hanafin (Dún Laoghaire, Fianna Fail)
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When I indicated at the beginning of the year that we hoped to publish within weeks, that was the situation which then obtained. However, it would be foolish of us to issue a long-term framework or strategy while ignoring the changes that have taken place in the economy since the publication of the Green Paper. The economic basis for any framework has changed completely in the past two years.

As I noted in my earlier reply, we addressed some of the immediate issues of significance. Equally, any changes recommended in the framework will be of a long-term nature. They will not impact on those who are about to reach retirement age. It is not correct to suggest that people who have now lost their pension rights will be affected by these recommendations. It is important that we set out a long-term framework.

I do not want to mislead the House by stating that the framework will issue in the next few weeks but it remains a priority for us during this term.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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In June the Government produced a document which proposed a pension insolvency minimum guarantee scheme. When will we see that scheme?

The former workers of SR Technics and Waterford Crystal are crying out for assistance from the Department of Social and Family Affairs in dealing with the serious pensions issues they are facing. The Minister referred to two schemes, neither of which have been commenced. In the case of Waterford Crystal, it appears no help is available at present. When will she move to provide much needed assistance to the former workers of SR Technics and Waterford Crystal?

Photo of Mary HanafinMary Hanafin (Dún Laoghaire, Fianna Fail)
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The Department of Finance is responsible for drawing up regulations under the pension insolvency payment scheme. Officials from that Department have been working on the scheme over the summer because technical issues have arisen. However, they continue to make progress on it. The fact that regulations are not in place has not impacted on the funds because it is not as if they have not been wound up. The fund managers know the scheme is coming and the funds will be included in the scheme if they qualify. That is the nub of the issue for one of the companies mentioned by the Deputy. The double control provided for in the scheme requires that the company be insolvent and the pension scheme be in deficit. My understanding is that Waterford Crystal meets these requirements but, unfortunately, the SR Technics company does not qualify because it is not insolvent.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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Is the Government providing any assistance to the former workers of SR Technics? The Minister indicated when she brought forward the proposals that they would be covered but this no longer appears to be the case.

Photo of Mary HanafinMary Hanafin (Dún Laoghaire, Fianna Fail)
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It was never stated that SR Technics would be included in this scheme. I met representatives of the group and they made good arguments but according to the definition of insolvency in legislation introduced by the Department of Enterprise, Trade and Employment, the company does not qualify. I sympathise with the workers because, as far as they are concerned, the company no longer exists. However, under legal terms and definitions it does not qualify for this scheme.