Joan Burton (Dublin West, Labour) | Oireachtas source

I do not propose to accept these amendments. Both amendments broadly entail placing a debt upon employers. It should be noted that while defined benefit pension schemes in Ireland are set up and maintained by employers on a voluntary basis, there has never been a statutory obligation on employers under Irish law to contribute to their pension scheme, although pension scheme rules can place some level of obligation. However, there is now a very robust regulatory structure in place as set out in trust law and the pensions Acts.

I am keenly aware that many schemes are making great efforts to ensure their ongoing viability. The process is generally managed through dialogue between the three principal parties - the trustees who operate in a fiduciary capacity under trust law; the employers who sponsor the scheme; and the members who are the employees who might, in many cases, be represented by their trade unions. Efforts are made to reach agreement on the steps that must be taken to secure scheme viability, which may include a mix of measures such as increased employer-member contributions, longer working and amended benefits. There have been a lot of such instances of restructurings in recent years.

It should be noted that pensioners, current and former members of pension schemes are collectively protected by a broad and detailed range of measures to safeguard their interests. First, the trustees of defined benefit pension schemes have a fiduciary duty under trust law and the Pensions Acts to act in the best interests of all scheme members. There are further regulatory safeguards and oversight by the Pensions Board. Scheme trustees must apply to the Pensions Board before they can reduce benefits. It is very important that people are aware of this fact. Before trustees make an application to the Pensions Board they must consult the employer, scheme members, pensioners and the authorised trade unions representing scheme members. Trustees must also have undertaken a comprehensive review of the scheme with a view to long-term stability and sustainability. They must have requested from the employer contributions sufficient to ensure the long-term stability and sustainability of the scheme. They are required to have taken legal advice on their powers and duties and the obligations of the employer to contribute to the scheme.

During the deliberative process consideration was given to placing a statutory obligation on the employer to provide for a base level of scheme funding that would secure a certain level of benefits in the event of a scheme winding-up or restructuring. The advantage of placing such a obligation on the employer would be to reduce further the possible risk to the State and protect the benefits of current and former scheme members. It would also prevent the employers from walking away from defined benefit schemes and encourage them to ensure a scheme was well funded and managed. However, there are strong arguments against the introduction of such an obligation on employers owing to uncertainty about the overall impact, particularly in the context of the current economic environment. Given current economic circumstances, the imposition of additional costs on employers might be counterproductive and impact on the viability of a business and the jobs of those employed. This is one of the issues in current circumstances that is particularly difficult. An obligation, or the perception that there is an obligation, could rank with company debt. It could have an impact on investment and growth and the employer's ability to raise fresh funds in the market. It would also give a competitive advantage to those employers who have never provided a pension scheme for their employees. My fear is that it would encourage employers to close their schemes. It would also be a complex measure to provide for and administer as employers could take avoidance measures. The measures would also need to be viewed in the context of a declining number of defined benefit schemes.

Given the complexity of the issues involved, the number of unknowns regarding their impact and the time constraints, it is not proposed to proceed with the measure. The overriding priority is to ensure pensioners and members of pension schemes are protected and that the future viability and sustainability of their schemes are ensured and made safer.