Sheila Terry (Fine Gael)

I thank the Minister for staying on and dealing with this matter. This is an issue I have raised a number of times in the Seanad, but today I want to speak about the wind-up of pensions.

We have spoken a lot about the pension timebomb, but the biggest timebomb will go off when people who have been paying into pension funds all their working lives reach retirement and discover their pension is worth little or nothing. The Government is not addressing that. While it is looking at how to encourage people to take out pensions such as PRSAs, it is not seeking protection for those who actually have a pension fund. That is a big concern of mine and I want the Government to address that issue. During the week, it was brought to my attention that a well known company in Dublin that is still trading is to wind up its pension plan. The company wrote to its employees telling them that it will no longer honour its liability to pay into their pension plan. Some of these people have been working for 25 years and are about to retire. They are now being told their pension is worth little or nothing. Those who have been there for ten years or less now realise their pension is worth absolutely nothing.

The directors of that same company pocketed €10 million in the past 12 months, paying themselves bonuses. This company makes money but has no regard to the pensions of its employees. Did the pensions industry allow that company to take what it calls "pension holidays"? That is, in times when the pension fund was oversubscribed, did the company not have to make contributions to the fund? I suspect that this is what goes on in the pensions industry. When times are good, companies do not have to pay in. That is an absolute disgrace and is something the Government should seek to end. When times are bad and the pension fund is undersubscribed, as is the case with this company, there is no obligation on the employer to put money back into the fund. The Government has an obligation to close off the loopholes whereby companies can do this. The pensions board also has an obligation. I have asked many questions of the pension board and of various Ministers, yet I cannot get answers. Today I seek a response on companies winding up their pension plans.

This could be dealt with in the same way as travel agencies deal with their holiday makers. Every year, holiday makers are stranded abroad because an airline company has folded. However, travel agencies have a bond whereby they are able to fly home those holiday makers. I ask the Government to look at this for the pension industry. There should be a bond so if a pension fund is wound up, the pension industry would be bonded to ensure that people who have paid into their pension fund over the years will have their pension protected. This is the least we could do. The Pensions Board and the Government need to be innovative in looking at how we can protect the pensions of people who have been paying into funds for many years. We should look at this bonding system as it would work very well.

It is no wonder that few people are taking up the PRSAs, or other new pensions when they see many people's pensions being eroded or wound up. People have lost confidence in the pensions industry and the Government is wasting its time trying to encourage people to take out new pensions. We need to protect those that are there and find new ways of ensuring people will have a pension when they retire.