Sheila Terry (Fine Gael)

I move amendment No. 4:

In page 26, between lines 16 and 17, to insert the following:

"33.—The Principal Act is amended by inserting the following new section after section 36:

36A.—(1) A pensions provider operating or providing a service in the State shall, as and from 1 January 2006, furnish evidence acceptable to the Minister that the pensions provider, has entered into an arrangement satisfactory to the Minister for the protection of persons who, enter into contracts with the pensions provider.

(2) The arrangement referred to in subsection (1) of this section is in this Act referred to as 'the Bond'.

(3) The Bond shall provide that, in the event of the inability or failure of the pensions provider concerned to meet its financial or contractual obligations in relation to the provision or maintenance of pensions, a sum of money will become available to the Minister, or to any person nominated or approved of by the Minister, as trustee, to be applied for the benefit of any customer of the pensions provider concerned who has incurred loss or liability because of such inability or failure to meet financial or contractual obligations.

(4) The Minister or, as the case may be, the person nominated or approved of by the Minister, as trustee, shall keep all proper and usual accounts, including an income and expenditure account and a balance sheet, of all moneys received by him on foot of a bond and of all disbursements made by him or her from any such moneys.

(5) As soon as may be after the end of each year, accounts kept in pursuance of this section shall be submitted to the Comptroller and Auditor General for audit and, immediately after the audit, a copy of the income and expenditure account and of the balance sheet and a copy of the report of the Comptroller and Auditor General on the accounts shall be laid before each House of the Oireachtas.

(6) Without prejudice to any existing right of a customer of a pensions provider to recover damages in relation to breach of contract, nothing in this section shall be construed as enabling such customer to recover any damages out of any sum of money made available under the Bond.

(7) The Minister may, by regulations, provide that—

(a) arrangements in relation to the Bond shall be entered into only with persons of a class or classes specified in the regulations, and

(b) the Bond shall be for such minimum sum and valid for such minimum period as may be specified in the regulations.".

This amendment is timely in that it represents a continuation of the debate we have just had. It seeks to put in place a bonding scheme to which all pension providers would have to sign up.

The proposed section 36A(3) states

The Bond shall provide that, in the event of the inability or failure of the pensions provider concerned to meet its financial or contractual obligations in relation to the provision or maintenance of pensions, a sum of money will become available to the Minister, or to any person nominated or approved of by the Minister, as trustee, to be applied for the benefit of any customer of the pensions provider concerned who has incurred loss or liability because of such inability or failure to meet financial or contractual obligations.

I am seeking a bonding system to be put in place as a safety net where a company fails to meet its obligations, where its scheme is underfunded or where the scheme is wound up. We know that is happening today. Perhaps the Minister could provide me with the figures concerning schemes that are currently underfunded, as well as those which have been wound up or are in the process of being wound up. The Pensions Board must be made aware of those situations. Will the Minister provide me with the number of such schemes?

If such a bonding scheme was established, it would provide a safety net for the individuals concerned. Consumers are entitled to that. Bonding schemes are already in operation in many other industries. For instance, it has been a valuable tool in the airline industry in cases where holiday makers are left stranded abroad. Under the scheme, the airline industry can step in at a moment's notice to fly individuals home. If an airline goes bankrupt before a voyage occurs, people can be refunded the cost of their holiday.

The amendment would provide the Minister with another option to provide a safety net for consumers. Given the profits that pension companies are making, they should be providing such a service. In light of the generous extension of the funding period the Minister is affording such companies, he should request them to provide this service in return for his generosity. The Minister has been extremely generous to pension companies in giving them a further seven years to ensure their schemes are fully funded, yet he is not asking for anything in return. We should aspire to ensuring that our consumers are protected.