Dáil debates

Thursday, 15 February 2018

Ceisteanna - Questions - Priority Questions

Defined Benefit Pension Schemes

10:40 am

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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2. To ask the Minister for Transport, Tourism and Sport the action he plans to take further to concerns that have been raised by unions regarding CIÉ pensions; when his attention was drawn to the underfunding of the pension schemes; his plans to remedy the matter; the reason CIÉ was in a position to disregard a ministerial directive; and if an independent investigation into the governance of both CIÉ pension schemes will be established. [7877/18]

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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What action does the Minister intend to take on the serious concerns raised by the unions about CIÉ pensions? Will he confirm when the underfunding was first brought to his attention? What plans has he to rectify that, and will he explain why CIÉ was in a position to disregard a ministerial directive?

Photo of Shane RossShane Ross (Dublin Rathdown, Independent)
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This is a subject on which Deputy Munster, like virtually every Deputy, will have received submissions from many of those working in CIÉ who are members of the pension funds involved. She will have the same sort of sympathy that everyone else would have for people in this situation where the pension fund is in deficit.

Issues pertaining to CIÉ’s pension scheme are primarily a matter for the CIÉ group, its employees and the trustees of the pension scheme. The employees of CIÉ are provided pension benefits on retirement from one of two defined benefit schemes, namely, the regular wages scheme or the superannuation scheme. In common with the overwhelming majority of such schemes, they are facing significant challenges in maintaining solvency to ensure prudent provision is made to fund the cost of future pensions in a low interest rate environment.

CIÉ has put on record at the Workplace Relations Commission, WRC, that it will not impose any change that it proposes without the agreement of the active members of both schemes and that it will continue to contribute to both schemes in accordance with the rules of the schemes. I have outlined the challenges faced in addressing the solvency of the schemes and the process under way to address the deficit, which involves detailed discussion between CIÉ and employee representatives, facilitated by the WRC. I urge all sides to re-engage with the WRC to resolve this issue.

The Deputy has also asked about CIÉ adherence to the requirements of statutory instruments. CIÉ has advised that it has complied with its contribution requirements under SI 323 of 2000 and SI 205 of 2010. Also, the Deputy may be aware that the schemes' accounts are independently audited and are required to be signed off by the trustees if they are satisfied that the rules have been complied with. These audited and trustee approved accounts form part of each scheme’s annual report that is circulated to all the members. To date, no case exists where this has not occurred.

Additional information not given on the floor of the House

In recent weeks, members of one of the pension schemes have highlighted particular concerns and these have been communicated to public representatives and raised with both the Committee of Public Accounts and the Oireachtas Committee on Transport, Tourism and Sport. Previous parliamentary questions from Deputies have also been referred to CIÉ for reply. I understand replies were issued to those Deputies last week indicating that CIÉ proposes to issue a comprehensive response to all queries on 22 February or as soon as possible thereafter. I am informed that a report on this issue will be presented to the CIÉ board which is meeting on 21 February. I will ask CIÉ to ensure that a comprehensive response will also issue to the Deputy on the issues she has raised.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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In 1994, an agreement was reached between CIÉ employees and the company to amalgamate the five pension schemes, which allowed the group to remove a potential €73 million pension deficit from its books. In return, the employees were assured by the board of CIÉ that it would guarantee the solvency of the pension schemes each year. The company by and large stuck to that commitment right up until 2009 when it failed to provide sufficient funding to ensure the solvency of the schemes in that year and the following years right up to the present. Since then, the board of CIÉ has underfunded the pension scheme to the tune of €80 million. How can the Minister say it has complied with requirements under statutory obligations?

Will the Minister establish an independent investigation into the governance of both CIÉ pension schemes? Did he investigate as to why they ignored a ministerial directive? He has not directly answered that question.

Photo of Shane RossShane Ross (Dublin Rathdown, Independent)
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I am not aware of any ministerial directive that they have ignored. I have asked them this question and they have complied with every statutory instrument to which the Deputy refers. It is a tragedy and is very difficult for the members, but it is not unique. The deficit the Deputy talks about is far from unique for people in this situation at the moment. It is a defined benefit scheme.

I think what is happening here is that people are getting together and, quite understandably and maybe quite rightly, making representations to the board, public representatives, me and CIÉ itself about the difficulties in which they find themselves. This has been in and out of the WRC several times and is now largely outside the WRC. The management and workforce have been trying to get together to produce a funding plan which satisfies the Pensions Authority. They have not been able to do that so far at this stage. The last one is what they call "off track". Every effort must be made to get this on track for the benefit of CIÉ and the workforce. I urge them to get back to the WRC. This problem is not uncommon and it is in their interests to resolve it. I have every sympathy for the difficulties in which they find themselves.

Photo of Imelda MunsterImelda Munster (Louth, Sinn Fein)
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The Comptroller and Auditor General told the Committee of Public Accounts that this was a statutory rather than a private pension scheme, so there is an obligation there under the law. More than 10,000 CIÉ workers have been left in limbo for the past eight years. They do not know what is happening with their pensions, all because the Government allowed CIÉ to ignore a statutory instrument. Not only has the company underfunded the pension scheme, it has also jeopardised the solvency of the two pension schemes. There are serious questions to be asked. There are questions to be asked of the Government, the Minister's Department and the previous Minister for Transport, Tourism and Sport as to why they have ignored this matter for the past eight years or more. When it comes down to it, CIÉ has been allowed to do this. Quite simply, it has broken the law. What is the Minister going to do about it, how is he going to resolve it and how is he going to hold CIÉ to account for not adhering to a statutory instrument?

Photo of Shane RossShane Ross (Dublin Rathdown, Independent)
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I repeat that CIÉ has assured me that it has complied with the statutory instruments to which I have referred and I will have to leave it at that. If the Deputy can refer me to a case where a statutory instrument has been defied by CIÉ, I will certainly take action on it because that is important.

CIÉ has received all the representations which have been made by Deputies and the public. It will hold a board meeting on 21 February and will respond to all those queries, including those from the Deputy. I will make sure she gets a response on 22 February. It is taking it seriously and is taking the concerns of people who are gobsmacked by the difficulties in which they find themselves seriously. It had to be regarded as not just something with which it has sympathy but something which has to be put right. If the Deputy can wait until 22 February, everybody will get a full response from CIÉ.