Thursday, 12 December 2019
Pensions (Amendment) (No. 3) Bill 2017: Second Stage [Private Members]
I move: "That the Bill be now read a Second Time."
I welcome the opportunity to speak to the Labour Party's Pensions (Amendment) (No. 3) Bill 2017. I welcome my colleague, Deputy Brendan Ryan, who has been pivotal in bringing forward this legislation, which, I hope, will pass Second Stage and progress onwards.
The Labour Party will always support the right of every person to a decent pension and a secure retirement. As a party we made this crystal clear at a recent conference in Mullingar, County Westmeath. Specifically, the Labour Party is committed to pausing the proposed rise in the pension age to give society more time to adjust. It is important to reiterate this as often as necessary given the Government's failure to listen, which was notable last week in the Dáil. The Taoiseach is on the Dáil record in regard to his opposition to our proposal to prevent a rise in the pension age. In short, he says that is unsustainable. This is despite the fact that, as I pointed out, Ireland has the youngest population in Europe and the third highest fertility rate in the EU. In 50 years' time Ireland will still have the lowest proportion of older people in the EU, with approximately 20% fewer than the EU average. Consequently, the percentage of national income spent on public pensions will rise by only three percentage points from its 2016 base of 8% over the next half a century.
In many respects, we should have one of the lowest pension ages in the EU but the opposite is the true. The Minister, Deputy Regina Doherty, might respond that we have previously subscribed to this proposal but as circumstances change we are entitled to change our minds. If we become fastidious and stuck, nothing will get done. We should not become so blinkered that we are not prepared to admit we were wrong. The Government intends to push ahead with the increase in the pension age to 68 by 2028. In contrast, the average EU pension age will rise to 66 years of age by the middle of the century. Many people who have already made 40 or more years of social insurance contributions - the way things are going probably 50 years in some cases - are being forced to retire at 65 years of age due to their contracts of employment. They are being forced to sign-on as jobseekers, when this patently is not the case. Moving the retirement age to 67 in 2021 would create a two-year pre-retirement waiting period, which is simply unnecessary at this time. This pre-retirement limbo is clearly not what the changes to the retirement age were intended to do. I accept that. Society needs more time to adjust, so that contracts of employment will more routinely allow people to work beyond 65 years of age. This is now in process, such that this adjustment to stall the increase in pension age might not be a long-term measure.
The Social Insurance Fund that pays for pensions will have a surplus of nearly €4 billion by the end of this year. According to the Government, it will cost €250 million every year we delay, so we can afford to postpone raising the pension age any further at this point in time. We can see this attitude again with the issue of defined benefit pensions, an issue of equal importance, which I bring before the House in this Bill. There are more than 700 defined benefit pension schemes in the State, covering more than 100,000 people, yet there is a fundamental problem with the regulation of defined benefit schemes, one that this Government has failed to legislate on for nearly four years. The Minister, Deputy Doherty, knows the extent of the problem and she is working on the issue within the Department. One sometimes has to overcome obstacles. The essence of achievement is to overcome those who are always baulking at making progress. The schemes are essentially designed to guarantee pension benefits on the basis of agree levels of contributions from employers and workers. However, the regulations that are currently in place are such that employers can unilaterally withdraw from the funding of schemes, even in situations where they are financially well capable of continuing to support their operation. How is it that two parties can enter an agreement on an issue as important as a pension scheme and one side can pull out, very often for spurious reasons, at a time of its choosing? We saw the consequences of this in 2016 with the pension crisis for workers in Independent Newspapers. It is worth recalling that case. In 2016, management of Independent Newspapers informed the trustees of the defined benefit scheme that it would cease making contributions to the schemes, leaving the trustees of the schemes in a situation where it might have been forced to wind up the scheme, leaving hundreds of active members with substantially reduced pension benefits and the real potential for cuts to existing pensions being paid out. In light of this controversy the Government promised to bring forward legislation to strengthen the rights of workers in defined benefit schemes and to fully clarify the responsibilities of employers. The heads of a Bill were published by the then Minister for Social Protection, Deputy Varadkar, but we have seen nothing from Government since then despite numerous promises that the required legislative changes were pending. It is rumoured that a small number of powerful employers are opposed to any change and they have been actively lobbying Government to prevent the necessary changes from being brought forward. I can assure the Minister that this issue has not gone away. Deputies O'Dea and Brady have introduced Bills along the same lines. I anticipate that they will be supportive of progressing this Bill to Committee Stage and onto the Statute Book. I do not mind who brings forward amendments, as long as what we have at the end of the day is a positive legislation for workers concerned.
Last week, we had the resolution of a situation regarding a defined benefit scheme at Pfizer, the multinational pharmaceutical manufacturer. I will not go into too much detail, but suffice to say there were very difficult pension talks between the workers, represented by SIPTU, and senior management at Pfizer for several years as the company sought to step back from the scheme. My understanding is that the company has made a commitment to the respective workers to maintain their core pension benefits. This shows, yet again, how workers represented by a trade union such as SIPTU, which I salute for its diligence and fastidiousness in this regard, can collectively achieve a resolution in the workplace, no matter how big the employer. As in the case of Independent Newspaper, this situation should never been allowed to develop. How can it be that a highly profitable multinational company can abandon its commitments relating to defined benefit schemes with the sole purpose of boosting its shareholder value through the level of dividends they provide? Profit for investors should never come at the expense of workers' future entitlements. This should be a sine qua nonin any scheme. Also, the State should not be expected to pick up the tab. It is for this reason legislation on the matter is badly needed, not only from an ethical prospective, but to protect the pension entitlements of employees who have worked hard to earn it. On a purely financial level, this legislation is needed to protect the public purse from having to plug the gap in pension pay because profitable companies have reneged on their part of the bargain. To date, no legislation has been forthcoming from this Government. This is yet further evidence of this Government bowing to the interests of employers instead of legislating to protect the pension rights of thousands of workers across the State. Yet again, this Government is sending mixed messages to the public. We have the Government telling us we need to raise the pension age further and faster than any other EU country because we apparently will not have enough money in the pension pot, which is undermined in the arguments I have put forward today. As in the case of the arguments I have put forward, there needs to be transparency around the arguments put forward by Government to see if they stand up to scrutiny. In failing to legislate on this matter and on the defined benefits schemes the Government is pushing more people into reliance on the State pension.
When one considers that, why would any worker, after hearing of the cases outlined, take the risk of entering such a scheme when his or her rights and lifetime savings might be drastically cut at any time in the future? This Government should be seriously worried about the precedent these cases have set, and the potential consequences for the 100,000 or more citizens who are saving for their pensions through these schemes. Deputy Brendan Ryan, who represents the very large area of Fingal, spoke about this at a parliamentary meeting. He has a background of working in industry.
Let us be clear about what the Government is doing. It is deterring workers from saving for their retirement, when it should be doing the exact opposite. We all know, including Deputies and spokespersons who are here, how to solve this issue. We are not trying to reinvent the wheel.
We should at our neighbours across the water in the UK. They may have got a lot wrong with the Brexit crisis from our perspective, but we could learn a thing or two from them as regards this issue. In the UK, the law prevents solvent companies from walking away from their obligations to their employees' occupational pension scheme. This should be the standard practice, but the pensions regulation regimes in Ireland and the United Kingdom have diverged in many respects, and particularly as to this essential aspect.
Accounting standards, FRS 102, requires an employer to recognise its liabilities to a pension scheme in its own financial statement. Yet removing those liabilities from the employer's own accounts can have a transformative effect on the company's accounts. The problem here is that an employer's obligation to its pension scheme is not governed by statute law but by the terms of the pension trust deed which the employer will itself have drawn up. As a result, it is rarely a binding obligation. The employers are, therefore, in the dominant position. Most direct benefit trust deeds allow the employer to wind up its pension scheme and to cease contributions, while ignoring any deficit in the funding of the scheme and the resulting inability to pay out the benefits originally promised.
As I mentioned, there are 700 defined benefit pension schemes in the State, covering more than 100,000 people. This will only continue to grow, so we cannot allow this uncertainty to continue. The reality is that the solution has been gathering dust on the Minister's desk for more than two years. There are at least three Bills that I am aware of.
In 2018, the Government's Roadmap for Pensions Reform promised clear action on this matter. In particular, the Government committed that by the first quarter of 2018 it would have advanced legislation to give effect to new controls on the funding of these pension schemes. However, we are now at the end of 2019 and we have heard of no positive action in this regard from the Government.
I have been contacted by the Irish Congress of Trade Unions which has told me in no uncertain terms that it supports the legislation that I am bringing forward this evening and of their frustration with the lack of progress on this important policy matter and it sees my Bill as an effective means of giving workers in defined benefit schemes the comfort that their pension savings are protected. It is time we stopped talking and took some action on the issue. This Labour Party's Pensions (Amendment) (No. 3) Bill 2017 does just that. Some of the other parties also have great ideas and there is no reason we cannot amalgamate and debate them all on Committee Stage.
The Long Title of the Bill reads "An Act to amend the Pensions Act 1990, and to provide for related matters." Specifically, section 1 amends Part IV, the funding standard, of the Pensions Act 1990, by inserting a new section 44A, dealing with employers' obligations in relation to deficiencies in the funding standard. Under this Bill, the new section will apply to relevant defined benefit schemes which are being wound up where the employer concerned is not insolvent, and the scheme does not satisfy the funding standard. To clarify, where the section applies, an amount sufficient to enable the scheme to satisfy the funding standard is deemed to be a contract debt - that is the essential thing - due from the employer concerned to the trustees of the scheme.
In addition, a scheme would be deemed to be wound up where the employer takes any step under the rules of the scheme, other than paying into its resources an amount sufficient to enable the scheme to satisfy the funding standard, which would be clearly exempt, that enables the employer, in accordance with generally accepted accounting principles or practice, to remove recognition of current or contingent liabilities towards the scheme from the employer's own financial statement.
The question of insolvency under the Bill is to be determined in accordance with the Protection of Employees (Employers' Insolvency) Acts 1984 to 2012. This section does not prejudice any other right or remedy which the pension trustees may have in respect of a deficiency in the resources of a scheme, and it ensure that the stated provisions apply to defined benefit schemes that came into operation before its commencement.
This is the least we should expect from employers engaged in such schemes. They should not renege on their responsibilities. When they are solvent, why should they run away from their responsibilities? We have to curtail that emerging trend which will develop further unless we take action. That is why I am proposing this Labour Party Bill in good faith to resolve, or certainly tackle, this issue for once and for all.
I hope everyone in the Chamber will listen to our call and take clear action by supporting this Bill's passage through the House. As I said, I am aware that Fianna Fáil, through Deputies O'Dea and Lahart, and Deputy John Brady of Sinn Féin, have drafted significant Bills in this area, which I acknowledge. On Committee Stage, we can look at amendments that might be necessary to strengthen this Bill. Our party is obviously willing to do so. This is above politics; this about protecting workers' rights and the legitimate expectations of workers who have made a contribution in anticipation of a pension at the end of their working life. This working period is being stretched out because, thankfully, people are living longer. This is an opportunity for us to grasp the nettle, progress this Bill to Committee Stage and get it on to the Statute Book. It is an issue workers and the Irish Congress of Trade Unions are watching carefully. Deputies Brady and O'Dea and myself have met them. They are aware of the situation and are eager that this is progressed. They has been patient but their patience can only last so long.
I thank Deputy Penrose because I know and appreciate he is acting in good faith and I know exactly what he is trying to do in respect of this Bill. I hope he appreciates that both I and the Government share his concerns. The overriding priority for the Government is to provide additional protections for pensioners and members of pension schemes to ensure the future viability and sustainability of the defined benefits, DB, pension system and to ensure continuing trust in the pensions system as a whole. However, the Government opposes this Private Members' Bill as it has already committed to bringing forward legislation in this area and for the reasons I will set out now.
It is essential that any new measures are carefully considered and recognise the current pension landscape in Ireland. When imposing a statutory duty on employers, it is important to ensure that a balanced, proportionate approach is achieved and that unintended negative consequences do not unknowingly arise.
Under existing pensions law there is no legislative obligation on the employer to make any contributions to a scheme. Nor is there an obligation on an employer to provide notice to members or consult in advance of ceasing contributions that they may already have been making.
As the House is aware, the general scheme of the Social Welfare and Pensions Bill 2017, now the Social Welfare, Pensions and Civil Registration Bill 2017, was published in May 2017 and contained a number of key measures relating to DB pension schemes. Unfortunately, a number of provisions could not be brought forward on the initial Second Stage reading of the Bill. However, I have announced that I am committed to bringing them forward on Committee Stage. Those provisions will, among other things, ensure that an employer cannot walk away at short notice from a pension scheme it is supporting, by providing for a 12 month notification period. In addition, where a scheme is in deficit and no agreement is reached on resolving it, these provisions will enable the Pensions Authority to make a funding obligation direction specifying payments to be made by a sponsoring employer to the pension scheme within a specified time period.
In short, these amendments will act to support existing provisions in our current Pensions Act and will encourage employers to ensure that schemes are well-funded and managed. Given the need to achieve a balanced and resilient solution, it has been necessary to consult with and obtain numerous legal advices from the Office of the Attorney General in respect of various aspects of this policy. That work is under way.
As Deputies will know, the Government's Roadmap for Pensions Reform that I published in February 2018 commits the Government to advancing the Social Welfare, Pensions and Civil Registration Bill and I will do that once I receive necessary legal clarifications that I need.
This Private Members' Bill, introduced by Deputy Penrose, proposes to insert a new section 44A to impose obligations on employers as to deficiencies in the funding standard by providing that, in certain circumstances, a debt can be placed on the employer which may be recouped by the trustees in a court of competent jurisdiction. It sets out that a new section shall apply where a relevant scheme, that is, a defined benefits scheme, is being wound up and where the employer concerned is not insolvent, and the scheme does not satisfy the funding standards. It provides that an amount sufficient to enable the scheme to satisfy the funding standard is deemed to be a contract debt due from the employer concerned to the trustees of the scheme.
It sets out, for the purposes of the section, the circumstances in which a scheme is deemed to be wound up and an employer insolvent. It does not prejudice any other right or remedy the pension trustees may have in respect of a deficiency in the resources of a scheme and it applies to defined benefit schemes that came into operation before its commencement.
I reiterate I recognise that the intent of the Bill is to protect the pension benefits of scheme members but there are a number of reasons for opposing the Bill. Before outlining them, it is important to state the decision to wind up a scheme is generally a matter for the trustees, and while in some cases the Pensions Authority may direct trustees to wind up a scheme, it is not necessarily the decision of a company, solvent or otherwise, to do so. The trustees of a scheme have a fiduciary duty under trust law to act in the best interest of all the scheme members.
The reasons for opposing the Bill include that it seeks to place the full obligation on the employer for any funding deficit in a scheme. Defined benefit pension schemes in this country are voluntary tripartite arrangements among employees, employers and trustees. Accordingly, they depend on the willingness of employers and employees to contribute to, and maintain schemes for, all their members. Ultimately, the responsibility rests with the parties for ensuring that the scheme is properly managed and funded to meet the promised level of benefits set out in the first instance. The Bill fails to take account of the individual circumstances of defined benefit pension schemes and the implications arising for sponsoring employers of such schemes.
More fundamentally, the text of the provisions set out in the Bill are so narrow in focus that they cannot be considered to fulfil its purpose. For example, it seeks to address cases solely where a defined benefit pension scheme has been wound up, by reference to the specific meaning given to the term "wind up" set out in the Bill. As a result, it will not ensure the provision of ongoing adequate funding and support to schemes by sponsoring employers.
In addition to applying only in a wind-up case within the meaning of the term specified in the Bill, the provisions will also only address cases where a scheme is in deficit. Accordingly, it will have no effect in cases where a scheme satisfies the funding standards but fails to provide any additional protection to scheme members of such defined benefit pension schemes. By contrast, the Social Welfare, Pensions and Civil Registration Bill 2017 includes provisions that will ensure ongoing support by sponsoring employers in addition to facilitating early dialogue between the employer and trustees to resolve any funding deficit and to oblige employers who intend to cease making contributions to their scheme to provide a minimum notification period of 12 months before they do so.
The narrow focus of the Bill is further reinforced by the manner in which the provisions specifically link a scheme wind-up to changes in the employer's accounting treatment of the scheme. This is a relatively rare occurrence and in any case does not represent the wind-up of a scheme in the true sense, as a change in the accounting treatment would not mean that the scheme would cease to operate with the resources distributed to its members. The linkage to the accounting treatment of a scheme renders the Bill incapable of having the widespread impact envisaged. The wind-up scenario proposed in the Bill relates to the manner in which sponsoring employers of defined benefit schemes represent the scheme on their balance sheet as per relevant accounting standards. Such standards, however, have no relevance in pensions legislation and the circumstances proposed in the Bill could not be viewed as a wind-up under such legislation.
Irrespective of how sponsoring employers of defined benefit schemes represent their schemes on their balance sheets, such schemes are defined benefit schemes under pensions legislation and as such are required to meet the funding standard requirements in any event. The funding standard is how Ireland meets its EU legal requirements in respect of technical provisions for pensions. Consequently, as matters stand, where a defined benefit scheme fails to satisfy the relevant funding standards, that is, where the scheme is in deficit, action is required by the trustees of the scheme to restore the scheme's funding position, such as by agreeing and submitting a funding proposal under section 49 of the Pensions Act. As the Bill places a full obligation for a scheme deficit on the sponsoring employer, it completely bypasses existing mechanisms and processes contained in the Pensions Act, such as the development of funding proposals.
The Bill fails to recognise the position of bona fide employers who have over many years provided significant support to their pension schemes. If, at some future point, a deficit should arise in a scheme through no fault of a sponsoring employer that has maintained support, it is questionable whether it is justifiable, reasonable or equitable to place the full responsibility for addressing the funding deficit on such an employer.
The Bill also fails to take account of, or have due regard for, the circumstances of individual sponsoring employers and the negative consequences that may arise for them and their employees, contractors and creditors from placing a full obligation on them to fund the scheme deficit.
The Bill proposes that an employer's insolvency shall be determined in accordance with the Protection of Employees (Employers' Insolvency) Act 1984, as amended. It is understood, however, that the Act would not necessarily cover all insolvent employers. In brief, that Act provides for the payment of certain moneys, such as unpaid wages, holiday pay and pension contributions, due to employees of a company where those payments or contributions remain unpaid at the date of insolvency. If, however, a company had paid any and all payments due to employees as of the time of insolvency, no applications for payments under the Act would or could arise. Accordingly, an insolvent company as I described would not be identified as such by the provisions of the Bill and, therefore, a debt could not be placed against that insolvent employer.
The Bill sets out in subsection (3) that the proposed new section 44A would not "prejudice any other right or remedy the trustees have in respect of a deficiency" in a scheme. The consequence of the Bill, however, would be to place an obligation on the employer for the debt in respect of the full scheme deficit, irrespective of any existing provisions under the Pensions Act. Given that the Bill bypasses existing provisions of the Act, it is difficult to ascertain how subsection (3) could be read or interpreted harmoniously with the other provisions of the Bill or the existing provisions of the Act.
While the Bill is well-intentioned, it lacks proportionality as it would place the full obligation for a scheme deficit on the sponsoring employer and does not take into account the ongoing support that employers have provided to their schemes, or the dialogue and engagement such employers have with trustees and scheme members to address funding deficits. The need to support further any such dialogue and engagement will be provided for in Committee Stage amendments to the Social Welfare, Pensions and Civil Registration Bill 2017. For the multiple reasons I have outlined, the Government will oppose the Bill before the House.
Deputy Penrose noted that my colleague, Deputy O'Dea, has tabled a Bill on the same matter. The Deputy mentioned my name, too, but in the context of this issue, I am his master's voice to Deputy O'Dea. It would not be within my grasp to produce a pensions protection Bill with a level of detail that could stand up to the same kind of scrutiny as a Bill that Deputy O'Dea is capable of producing. Deputy Penrose's Bill is the Pensions (Amendment) (No. 3) Bill, while Deputy O'Dea's is the Pensions (Amendment) (No. 2) Bill. Nevertheless, we will support the Bill before us. I note the Minister has left the Chamber.
I wish to make a couple of points on behalf of my colleague, Deputy O'Dea, as well as some personal comments that any Deputy might make. They relate to the importance and integrity of a person's pension. In the lifetime of this Dáil, which is approaching four years, there have been multiple examples of employees who sailed along in their professions and lives on the understanding that when they retired, there would be a pot to which they had contributed generously, only to discover the shocking news that it did not exist. It is difficult to find an analogy for it but one might say it is like a passenger on a jumbo jet knocking on the cockpit door, only to discover there is nobody there and that the passenger is alone. It must be truly devastating to discover that the basis for one's future after retirement has disappeared. I accept what the Minister stated about Ireland being full of examples in industry of great employers who have provided great pension schemes and delivered on them with integrity to their employees.
Many of them who would be known to me managed to achieve longevity and ended up retired for longer than they had worked for. They continued to receive the benefits to which they and their employers had contributed over the years.
I thought it was interesting that the Minister spent the bulk of her response criticising Deputy Penrose's Bill without really outlining, other than in very brief terms, where the Government is on this issue. Amendments will be considered when we move on to Committee Stage of the Government Bill. In my relatively recent and naive experience, this Dáil will not last long enough for the Government's proposals, which have been in front of us since 2017, to be considered. It is an indictment of the Government's attitude to this matter that it will not be resolved in any concrete or full way before we go to the country. The issue of defined benefit schemes will drift on into the next Parliament. Deputies Penrose and O'Dea have been pointing to the Government's tardiness and lack of urgency with regard to this issue, which is extremely urgent for the public.
Fianna Fáil has proposed the Pensions (Amendment) (No. 2) Bill 2017 as a means of addressing this issue. Our comprehensive Bill has been passed on Second Stage and is now being held up by a money message. I have no doubt that a similar fate may await the legislation that Deputy Penrose has brought before the House this evening. I am aware that the Deputy is not seeking another mandate in this House. I admire his energy, dynamism and interest in producing and presenting legislation before the House. Many colleagues of mine on this side of the House are admirers of the Deputy. It is a credit to him that at this potentially late stage in the lifetime of this Dáil, he continues to be determined to drive meaningful legislation through this House.
We are supporting the Bill before the House. Deputy Penrose has said that he is open to amendments. Equally, Deputy O'Dea is open to amendments in the case of his Bill. We will make any necessary amendments to both Bills on Committee Stage to ensure they are as robust as possible. Our Bill provides for an appeals mechanism that may be used when a pension is being wound up by the trustees of the scheme. Furthermore, our Bill compels the Pensions Authority to conduct a study of how liabilities are calculated and to report back to this House within six months. We have some reservations about the UK model. Such matters can be thrashed out on Committee Stage. The purpose of our Bill, like Deputy Penrose's Bill, is to ensure employers meet their obligations in respect of defined benefit schemes when such schemes are being wound up.
A couple of points need to be made because they were not addressed by the Minister. The Government has failed to address this issue. Almost three years have passed since the general scheme of the social welfare and pensions Bill 2017, which ultimately became the Social Welfare, Pensions and Civil Registration Bill 2017, was published. It contained a number of measures relating to defined benefit pension schemes. Even though the Second Stage debate on the Social Welfare, Pensions and Civil Registration Bill 2017 concluded on 4 October 2017, which is more than two years ago, and Government approval for additional provisions in the Bill was finalised 18 months ago, nothing has happened since. Deputies on this side of the House believe the Minister has sat on her hands. She has failed to tackle this issue for once and for all. Nothing she has said today gives us the impression that the matter will be brought to a conclusion soon. It seems to Opposition Deputies that this is another case of the Government making announcements but not actually delivering.
Deputy Penrose made a number of points that I do not want to repeat for the sake of repeating. There is one point I would like to reinforce, however. The Deputy is particularly passionate about the closure of defined benefit pension schemes by large solvent companies. This phenomenon needs to be addressed. In Ireland, we have seen a number of cases in which profitable companies that pay dividends have decided to wind down defined benefit pension schemes to the detriment of members of the scheme. This is the kind of stuff that happened at the turn of the 20th century, in an era before we had trade unions and workers' rights. At that time, we had not achieved gains like moves towards equality, improvements in labour laws and protections for people against big corporations. As we approach 2020, it is hard to believe we are fighting once more to prevent some corporations from getting their grubby hands on what is not rightfully theirs.
I emphasise that some companies have been some great employers in this country. I do not know whether they are still great. In Dublin, Guinness offered the Rolls-Royce of pension schemes and looked after its workers exceptionally well. That is certainly what I would have reckoned over the years. It was a model scheme. Many other employers did likewise and continue to do likewise. All companies must be compelled to treat the members of their pension schemes in an equitable manner. Deputies O'Dea and Penrose have introduced legislation to ensure healthy companies cannot avoid their responsibilities to pension funds that are in crisis. The issue of employer responsibility is a central part of the Fianna Fáil legislation and of Deputy Penrose's legislation. I apologise to Deputy Brady for omitting to include him in my comments. He was out of my line of sight. I know he is supportive of the efforts that are being made in this regard.
More and more companies, including profitable companies, are deliberately choosing to wind up defined benefit pension schemes. The Minister is allowing them to walk away from these debts, which is not something that is permitted in other jurisdictions. There can be no justification for this. It would be a bad day if we were to seek to justify it. It has become part of the lexicon to say that this happens. It has been part of the conversation. If this Government is to have any legacy as it comes to the conclusion of its term in office, it must make right the most unjust scenario in which people can write off these debts, take what is not rightfully theirs or deny others what it rightfully theirs, thereby leaving ordinary small people to pick up the remnants of these pension schemes as they try to survive into what ought to be their comfortable retirement years. I do not want to use a cliché by referring to "twilight years". The Government must correct this wrong by making it impossible for ordinary people to be at the mercy of people who do not play to the same kind of rules as everybody else. Ordinary people depend on this House to make the rules for them, to protect them and to ensure their futures are secure.
I welcome the opportunity to speak on this important legislation. Previous speakers have alluded to the fact that it is one of three Opposition pensions Bills that have been introduced, primarily due to Government inaction, to deal with this serious situation. Deputy Penrose's Bill is being discussed this evening. Deputy O'Dea's Bill is waiting alongside a Bill in my name. During Questions on Promised Legislation yesterday, the Labour Party leader, Deputy Howlin, asked the Taoiseach if he would be supporting this Bill. The Deputy opened his contribution by citing legislation that has been introduced in England to make it illegal for solvent companies to move away from their pension obligations. The pensions Bill in my name contains a similar provision, but the Bill before the House does not, unfortunately. I hope to propose an amendment in this vein if we have an opportunity to do so on Committee Stage.
The real nub of the issue we need to tackle is the need to prevent companies from walking away from their pension obligations to their workers. We need to stop solvent companies, many of which are very wealthy, from reneging on their pension obligations and walking away from the pension commitments they have made to their employees who have paid into pension schemes for many years. Ultimately, it is the employees who suffer. The Taoiseach spoke about job losses and putting companies out of business but we need to tip the balance back in favour of the workers who suffer in the scenarios that are becoming more common - the move from defined benefit schemes to defined contribution schemes and the closure of defined benefit pension schemes. Instead of looking at the impact on big business, the Government should be looking at the impact on workers.
The Social Welfare, Pensions and Civil Registration Bill 2017 was referred to Committee Stage on 4 October 2017, more than two years ago. At that time the Minister stated on the record that necessary amendments relating to DB schemes were being drafted by her Department and the Office of the Attorney General, which were to be ready and brought to Committee Stage that autumn. Since then we have heard about the delay in bringing forward these amendments due to their technical and complex nature. I find this hard to believe. At the same time, companies close their DB schemes whenever and however they feel like it. What the Minister and the Government did in 2017 was send out a signal to all companies looking to wind down their schemes that now was their opportunity to do so because it was possible that it would bring forward amendments. The Government gave them over two years to do what they liked and they are doing it because they can given no legislation protects pensioners when profitable companies decide to stop paying into their pension funds.
We saw the outworking of that in 2017 when Independent News and Media attempted to cease making contributions to its DB scheme. The latest of these schemes to close was Irish Life, the State's largest pension provider. Not only was the scheme not in deficit, it had a huge surplus of more than €200 million. The Government is sitting back and allowing workers to be left high and dry by large employers who are profitable and solvent but who no longer want to carry the risk of a DB scheme on their books. Instead, they want to put all of the risk on the employee and the Government stands by and do nothing while the company walks away. This has gone on far too long.
We have had issues with pension pots in Aer Lingus, Ryanair, Irish Life, Independent News and Media and, in all cases, the workers' pensions are at stake. Rather than concerning ourselves with how wealthy companies can afford to sustain their DB schemes, we should ask why the Government is letting them walk away.
We need to rebalance the scales. We need to ensure that where workers enter into pension schemes in good faith and make their contributions, their pension pot, at the very least, is protected and guaranteed. Otherwise why would anyone enter into a DB pension scheme?
The Government needs to stop hiding behind the difficulties in drafting amendments to offer protections to scheme members and get on with doing it. Although the majority of employers want to do the right thing by their employees' pension scheme, the Government has a responsibility to protect the small minority of employers who may be content to put their employees' pension pot at risk. We know that in England increased protections for DB pension scheme members were introduced while at the same time being able to balance the protection of members' benefits with the sustainability of the employers business, in recognition of what the Government is telling us, that DB scheme liabilities can be expensive for some employers. That is the balance that we have to strike here. If it can be done in England, then it can also be done here. The Government needs to take this issue head on before any more workers lose out, through no fault of their own. We need to stop employers taking the decision to renege on their pension obligations and where there are deficits in DB schemes, we need, where the employer is solvent, to put it up to that employer to keep their commitment to workers.
Sinn Féin will support the Bill. We will look to strengthen it and if given the opportunity at Committee Stage, we will bring forward amendments. We can bring in robust legislation that will protect workers and their pensions. It is shameful that the Government has allowed two years to elapse and put so many workers pensions at risk, giving the signal to employers that now is their opportunity to get out if they wish. The Opposition has three Bills before the House and I am delighted that Deputy Penrose's was chosen to proceed. We need to move to Committee Stage as soon as possible. We owe it to the workers and the pensions pots that they paid into in good faith over many years.
I am responding on behalf of the Minister, Deputy Doherty. She understands the intention behind the Bill is to alleviate the issues that are continuing in defined benefit schemes. She and the Government share Deputy Penrose's concern on this area. There is a danger of unintended consequences in any legislation. It is essential that any proposed changes be carefully drafted and analysed in order that a fair, balanced and proportionate approach can be achieved especially when considering imposing a statutory duty on sponsoring employers of DB schemes.
I would like to reiterate some of the points made earlier by the Minister. While the Bill may be well intentioned, it lacks proportionality as it seeks to place a full obligation on the employe for any funding deficit in a scheme. As the Minister stated, DB pension schemes in this country are voluntary tripartite arrangements between employees, employers and trustees. It is important to take account of the individual circumstances of DB pension schemes and the implications arising for sponsoring employers of such schemes. This Bill does not recognise the position of employers who have, over many years, provided significant supports to their pension schemes and fails to take account of the circumstances of the individual sponsoring employer and the negative consequences that may arise for that employer, its employees, contractors and creditors, from placing a full obligation to fund the scheme deficit.
The purpose of the Bill is to address situations where a DB pension scheme is being wound up, as set out in the proposed provisions. However, as the Minister outlined, the text of the provisions are so narrow in focus that they cannot be considered to fulfil this purpose and will not ensure ongoing, adequate funding and support is provided to schemes by sponsoring employers.
The Bill will only address circumstances where a scheme is in deficit and it will have no effect in cases where a scheme satisfies the funding standards and fails to provide any additional protection to scheme members of such DB pension schemes. The provisions of this Bill specifically link the wind-up of a scheme to the manner in which sponsoring employers represent the scheme on their balance sheet as per relevant accounting standards. A change in the accounting treatment of a scheme does not mean that the scheme would cease to operate with the resources distributed to its members.
Regardless of how DB schemes are represented on the sponsoring employers' balance sheets, under pensions legislation, such schemes are DB schemes and, as such, are required to meet the minimum funding standard requirements. Where a DB scheme fails to satisfy the relevant funding standards, action is required by the trustees of the scheme to restore the scheme's funding position such as agreeing and submitting a funding proposal under section 49 of the Pensions Act. This Bill places a full obligation for a scheme deficit on the sponsoring employer and it completely bypasses these existing mechanisms and processes in the Pensions Act.
Unlike this Bill, the Social Welfare, Pensions and Civil Registration Bill 2017 includes provisions that will ensure ongoing support by employers and early dialogue between them and trustees to resolve a funding deficit and also includes provisions to oblige employers who intend to cease making contributions to their scheme to provide a minimum 12-month notification period. Other provisions will enable the Pensions Authority, where a scheme is in deficit, to make a funding obligation direction specifying payments to be made by a sponsoring employer to the pension scheme where no agreement was reached, within a specified time period, to resolve that funding deficit.
These amendments, which will be brought forward at Committee Stage, will act to support existing provisions in the Pensions Act and will encourage employers to ensure that schemes are well funded and managed. I assure the Deputies that the Government is very conscious of the issues raised in this Bill and DB pension schemes generally. I hope that Deputies now have a clearer understanding why the Bill is being opposed.
I thank all who contributed, particularly Deputies Lahart and Brady. I assure Deputy Brady that I have no problem accepting the amendment he has spoken of to strengthen the Bill. We all have one common objective - there is no one-upmanship - which is ensuring that this achieves the very noble objective of protecting employees. What I have heard from the Minister is an employers charter. It was like something that had come from IBEC.
In fact, IBEC would not have written it so well. I agree that there are many great employers who go above and beyond the call of duty in fulfilling their obligations and responsibilities in terms of pension schemes. This Bill is not intended to deal with those types of employers, because they are already meeting their obligations. As the Minister correctly noted, there are many employers who were supportive of schemes over many years and paid out to employees under them. Those schemes did not go into deficit or are unlikely to go into deficit in the future and they are not the object of this Bill.
The Minister and Minister of State, or the person who wrote their speeches, have deliberately misconstrued the objectives of the legislation I have brought forward, which should, of course, be read in conjunction with the pensions legislation that is already in place. It proposes to insert a new section 44A into the 1990 Act and it should be construed in conjunction with the other provisions of that Act. In what way does my proposal come into conflict, as the Minister suggested, with various aspects of the existing legislation? That is a novel proposition and one I have not previously encountered in almost 28 years in the Dáil. As I said, this Bill will be read in conjunction with other legislation, and a court seeking to construe the law would look at the whole legislative framework. I am merely seeking to insert a new provision in the existing legislation in the same way that Deputies Brady and O'Dea are proposing to do in their respective Bills. In short, we are seeking to amend the Pensions Act to address its lopsided provisions.
I accept the Minister's point that pension provision involves a tripartite arrangement comprising the employer, employees and trustees. However, one group, the employees, is in an inferior position in that three-legged stool. When things become difficult and there is any smell of trouble, employers are in the dominant position and will gather up their forces and run for the hills. I am talking about solvent employers, some of whom were named by Deputy Brady and me. None of them is on the margins of viability. In fact, they are the wealthiest of the wealthy. I salute Alan O'Leary and Ray Mitchell, the SIPTU representatives who represented their members in Ringaskiddy and Little Island in the negotiations with Pfizer. After a solid engagement and with the company's intention being to move from defined benefit to a defined contribution scheme, even on a going forward basis, the workers held out and won a battle. One must salute SIPTU and the other unions that are fighting on behalf of their members. I understand Unite is negotiating on behalf of employees in Irish Life. We should salute all trade unions. If they were not there, we would be looking at a steamroller going over all the rights of workers.
My essential purpose in bringing forward these proposals is to protect people who are vulnerable and not in a dominant position. The Minister has spent a lot of time consulting on these matters. It seems the Attorney General's office has been extremely busy, which is a good thing. I reiterate that this Bill is aimed at dealing with healthy and profitable companies that seek to walk away from their liabilities, responsibilities and obligations. We have heard a litany of reasons from the Minister and Minister of State as to why the Bill should be rejected, most of them from the employers' perspective and with little recognition of the situation of employees.
As I said, I would accept any reasonable amendment, including that suggested by Deputy Brady. There was reference to the situation in the UK. It is important to note that when it comes to workers' rights, that country is not as advanced as we are in some respects. Workers in this country have secured many rights since we joined the EU in the 1970s. I salute all of the workers involved in that fight down through the years. I recall that council employees like my late father had to cycle 10 or 12 miles a day in the course of their work. The first break they won in the 1970s was to reduce that requirement to 5 miles. If there was a need to travel more than 5 miles, they could get a lorry with a cover on it. They were simple rights but, like all rights, they were hard won. That is why we should never look to trample workers' rights but instead make sure to protect them.
A pension is a very hard-won right. In some cases, it is earned by people working in difficult, hazardous and demanding jobs, both mentally and physically. When they reach the end of the line in terms of their working life, they should at least be able to enjoy their retirement years with some degree of comfort. Instead, some of them are having to see the dividends of their work being enjoyed by company shareholders. Then, to add insult to injury, the workers are left carrying the can when their employer winds up a solvent scheme or fails to make the appropriate contributions to ensure it remains solvent. What I am seeking with these proposals is to effect a recalibration of rights, obligations and responsibilities. I will be happy to accept amendments from any of my colleagues in the Opposition who wish to bring them forward. I know that any such proposals will be reasoned. I have seen Deputy Brady's Bill and have no problem with its provisions. I am proposing that we work together to ensure that we end up with legislation that is focused on the protection of workers. When one looks at what was proposed by Independent News and Media, for instance, the net effect was simply to enable shareholders to profit while employees were to have their pension entitlements reduced. Fortunately, a resolution was reached in that case and I salute all involved for achieving it. People such as Séamus Dooley and others in the National Union of Journalists, NUJ, who have represented their members well, were extremely concerned at the time about that development. We should commend everybody involved in those negotiations.
I accept the Minister of State, Deputy Kyne, is standing in for the Minister. Deputy Brady is correct that we are worn out. Our eyes are out on sticks. I wish to highlight the dilatory and tardy way in which the Minister addressed these proposals. I introduced the Bill in October 2017, two years and two months ago. I accept that this is a complex area and that issues might arise. I am not so dumb in terms of appreciating the difficulties, but two years and two months is taking the biscuit. There has been no urgency at all. Instead, we have had a lethargic, apathetic response from the Government. All of us here on this side of the House want this issue addressed once and for all. For that reason, I will press on with this, with the support of Fianna Fáil and Sinn Féin and perhaps other Members. Let us get the Bill to Committee Stage.
It is time to cut out the nonsense because the longer these provisions are delayed, the greater the incentive for more companies to avail of the opportunity that exists. There is a big hill close to where I lived called Laragh Hill. I think there is a place called Laragh in Deputy Brady's county as well. The saying at home is that something is as wide as Laragh Hill. In other words, one would get two buses across it. There is an opportunity for certain employers to drive a coach and four through the rights for which workers have fought. We cannot allow that. Other Members will be able to do something about this, but it is probably my last opportunity to present a Bill in the House and I am delighted to have it. This is a fundamentally important issue concerning the protection of workers' rights. If progress is not made on the issue, many Members will be back here looking to address it. As an experienced politician who has met a lot of people in his time, I know that Deputy Durkan will have to look at the issue again in this Chamber. However, there is no need for anyone to come back to address it. We have the chance to resolve it by way of the two or three Bills that have been brought before the House. Let us do it now.