Peadar Tóibín (Meath West, Sinn Fein)
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As the Minister of State will hopefully be aware, a massive crisis has been brewing within the pension industry in Ireland. A large part of that crisis has arisen because of the recession and the actions of some employers in regard to providing for pensions. However, those actions have been exacerbated by the Government in two ways, the pension levy and regulations.

The introduction of the pension levy by the Fine Gael and Labour parties and the changes to the minimum funding standard has meant a loss of benefits to pensioners and also the closure and potential closure of schemes. It is the workers who are reliant on those pensions, those who are in their old age, who are paying the cost. Shockingly, the figure involved is approximately 250,000 people. It should be remembered that these people are not individuals in receipt of massive salaries or exorbitant pensions. Some 70% of older citizens who are living alone survive on pensions at the bottom 20% of the income distribution. In many regards, these individuals are the forgotten poor of society.

The Government introduced a 0.6% pension levy which has had a massive effect on pensions. I and my colleague on the other benches, Deputy English, will be aware of the Tara Mines workers. These workers suffered a 10% reduction in the level of their pensions as a result of a 0.6% pension levy. When they asked the Government Deputies why they had voted for the levy, some of them said they did not know that would be an outcome of it.

That is a shocking indictment of any Member who is responsible for their constituents.

The average pension of a Tara Mines worker is €10,000 and the levy means a low income has been reduced by €1,000. Many of the pensioners have demonstrated throughout County Meath and outside the gates of Leinster House. They have been led to believe on a number of occasions by Government Members that the decision would be reversed but that has not happened. Last year, they were on their own in many ways but I have spoken to people working in the insurance, banking and construction industries. The cost of the levy was absorbed by the trustees of their pension schemes but this is no longer the case and, therefore, what happened to Tara Mines pensioners last year is now happening to pensioners across every industry. Many of these individuals say that the Government regulations regarding the reserves that must be maintained by pension schemes is having the effect of reducing the pots available to pensioners even though the Government may be seeking to strengthen those pension pots and make sure they exist into the future. Some of the schemes will close in the future. Will the Minister of State address these issues and give the Tara Mines pensioners and all the other pensioners affected some hope that the Government will reverse the pension levy and reform the pension reserve regulations in order that they do not destroy people's pensions in the future?

Kathleen Lynch (Cork North Central, Labour)
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I apologise for being late; I expected the previous business to go on a little longer.

I am taking this matter on behalf of the Minister for Social Protection, who is in Brussels today. It is acknowledged that the fundamental problem facing occupational pension schemes is that pensions are significantly more expensive due to increasing life expectancy and lower than expected investment returns, which are reflected in increased annuity rates.

The Pensions Regulator suspended the funding standard four years ago, following the downturn in the financial market, to give trustees-employers an opportunity to assess the impact on pension funds and to give them time to develop responses to the challenge. The reintroduction of the funding standard was delayed on a number of occasions pending changes to legislation which were designed to help trustees respond to the funding challenges facing pension schemes. The Government also introduced the following measures to ease the funding pressures on defined benefit schemes while the funding standard was in abeyance: removal of the priority given to post-retirement increases for pensioners to ensure a more equitable distribution of assets in the event of the wind-up of a defined benefit scheme; the pensions insolvency payments scheme was established to reduce the cost of purchasing pensions for trustees where the employer has become insolvent; and the introduction of the sovereign annuity initiative.

The purchase of a sovereign annuity is an option which the trustees of a scheme can exercise in order to reduce scheme liabilities. The sovereign annuity market is still in the early stages and demand for sovereign annuities remains to be seen. However, last August, the National Treasury Management Agency announced details of the sale of €1.021 million of Irish amortising bonds of between 15 and 35 years duration. It is anticipated that the NTMA will be in a position to issue further bonds as pension fund trustees complete their funding plans in line with the funding standard.

The funding standard provides a benchmark against which the health of a scheme can be tested. The existence of the funding standard itself is not the central issue in regard to whether a scheme is properly funded. Rather the responsibility rests with the employer and the trustees for ensuring that the scheme is properly funded and managed. However, the funding standard does provide the regulatory mechanism for ensuring that a scheme can live up to the promised level of pension benefits. The requirement for a risk reserve is also being introduced from 2016, to provide a level of protection for scheme members against future volatility in financial markets. It is accepted that the requirement for a risk reserve presents an added challenge for schemes, however, guidance issued by the regulator identifier options which the scheme can consider in meeting this requirement by 2023. This guidance is being kept under review. Overall, the changes made to defined benefit schemes are intended to bring increased stability to pension promises in the future and lessen the exposure to risks of schemes.

I am not certain that this answers the Deputy's question. There are no plans to remove the pension levy at this time. I do not say it is not under review but there are no plans to remove it.

Peadar Tóibín (Meath West, Sinn Fein)
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I have been informed that profitable businesses are reducing their exposure to workers' pensions and, in one case, a bank, which is currently repatriating profits to its English parent, is reducing the pensions that workers have paid into. While it is necessary to have reserves and proper regulations in this area, it is important that they do not damage the livelihoods and wages of pensioners.

The pension levy is a bizarre wealth tax. It makes no proper discrimination between the pension a person earns and does not earn. Tara Mines workers have lost 10% of their earnings. Given many Government Members did not understand the impact the levy would have and given it affects such a vulnerable section of society so severely, it must be their desire to have a such a tax reversed. It must be considered that the levy was designed to create jobs. Ireland has lost more jobs per capita than any other western country since the Great Depression, 87,000 people emigrated last year, which is the highest number since the 1800s and 33,000 left the workforce last year. The pensioners are paying for a Government jobs plan which has resulted in the worst jobs figures imaginable. The burden is on their shoulders while the Government's jobs plan, unfortunately, fails. Will the Minister of State at least bring this issue to the attention of the Cabinet and ask that this unfair levy be reversed in the budget?

Kathleen Lynch (Cork North Central, Labour)
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Every elected representative at community, local or national level understands it is an extraordinarily difficult time for everyone who is not working, including those who are on a pension. I have no problem bringing the Deputy's concerns, which I am sure he has expressed previously to her, to the Minister and I will ensure that happens.

With regard to whether people understood what would happen as a result of the pension levy, more people on the Government benches understand economics than in the Deputy's party. For that reason, the Labour Party was the only party in the House that voted against the blanket bank guarantee.

Peadar Tóibín (Meath West, Sinn Fein)
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That is not true.

Kathleen Lynch (Cork North Central, Labour)
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If people in his party had understood that on the night they voted in favour of it, we would not be in the mess we are in today and the Deputy must take that on board as well.

Peadar Tóibín (Meath West, Sinn Fein)
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The Minister of State should look at the record.

Kathleen Lynch (Cork North Central, Labour)
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Perhaps the Deputy will take that message back to his party while I take his concerns back to the Minister for Social Protection.