Mary Hanafin (Dún Laoghaire, Fianna Fail)

Unfortunately, I cannot speak about any particular company but this scheme is not a bail out of pension funds. A total of 90% of defined benefit pension funds in the country are in deficit. There is no way the State can take on the liability of all of those funds but where there is the double whammy of a fund which is in deficit and a company which is insolvent, we are trying to give something back to the workers in that position.

In fairness to employers, they have made great strides in making good the gaps that have arisen in pension funds but some of those gaps are so large it would be impossible for them to do so in the short term. Where a company has run into difficulty, that fund must wind up. We are conscious of the fact that there are people who have retired who have their full rights and then workers who have been paying in all their lives who do not have those rights. These measures will at least give some extra money to those people but it is not a pension protection fund. It is not the State taking over the liabilities of every defined pension scheme in the country. It is a restructuring of the priorities, not taking from anybody, and setting up a scheme where annuities can be purchased more cheaply to give more back to the workers.

The cost of purchasing an annuity on the open market is very expensive. There is commission and profit but there is also the cost of having to have the assets to back up the cost of the pension, and none of those will fall on the State. There will be some minor administrative cost but it should reduce substantially the cost of the actual annuity on the open market, and that can go straight back to the worker. It is not possible, however, for the State to take over the liability of all the defined pension schemes. If Senator Hannigan's amendment was simply a technical one, as he said, it might be feasible to do that but it is not because it opens it up to every scheme in the country. I am sure we would also be liable under state aid and competition rules were we to do that.