Jim Walsh (Fianna Fail) | Oireachtas source

I thank the Minister for her comprehensive response to the amendments which they warranted.

To deal with the obligation on employers first, the requirement is that it would only apply to companies which had the financial capacity to deal with the shortfall and deficit, around which one would have to develop a model. I am not talking about companies which are on the cusp of viability or marginally profitable with few reserves. One does not want to affect employment in these companies. I share the Minister's concern that anything we do must not drive employers out of the scene. I am referring to the many companies which are very profitable, have good reserves and could make a contribution to meet the deficit in a situation where it would have no adverse effects on their viability, although it might have an impact in the short term on the distribution of dividends or shareholders' funds.

When I was in business, I attended seminars at which people talked about the stakeholders in a business and shareholders ranked highly because they were the ones who had invested their money. However, there are other stakeholders who equally need to be considered. Among them, one of the priority groups would be the employees who, in many instances, give their lives' work to a company. There are also a company's suppliers and customers, all of whom must be taken into account because one does not have a viable business without customers. All stakeholders must be considered in the running of the business and the decisions taken by management and the board. In this instance, the legislation is coming down heavily on one stakeholder group - the employees.

I ask the Minister to look at the amendments and the manner in which we are putting them forward to see whether something could be done in companies that have cash flow, as that would remove the risk. The Minister would have to develop a model of thresholds above which the reserves and profit levels would have to be maintained, but that could be worked out economically and from an accounting point of view. It might take a little work by officials in the Department and the Pensions Board, but it would not be impossible to develop such a model. It would carry no risk for such employers. Like the Minister, I applaud those employers with private pension funds.

When I was the chief executive of a company many years ago, I always resisted granting unnecessary wage increases. This was because they posed a risk to jobs, particularly in the competitive arena in which the business was operating. I recall trying to encourage the employees in the company, particularly the general operatives, to focus on establishing a pension scheme. Many companies have pension schemes for administrative and clerical staff but such schemes do not always apply to general operatives and other non-skilled and semi-skilled employees. I recall persuading the union involved that it should have been pursuing the setting up of a pension scheme rather than pay increases. A scheme was eventually put in place. I was glad, some time later, that when private insurance companies tried to encourage the employees at the company to join their pension schemes, these companies actually informed them that they were very fortunate to have access to the type of scheme we had put in place and that it was one of the better ones.

I fully agree with the Minister's assertion that we do not want to frighten companies of this type away. There are many companies which do not have pension schemes which should have them. I request that the Minister reconsider the position on this matter. I discussed with Senator Paschal Mooney, my party's spokesperson on social welfare in the Seanad, the question of what we should do in respect of this matter and we decided that we should probably withdraw the amendment with leave to re-enter it on Report Stage. I genuinely hope that in the interim the Minister will give genuine consideration to whether there is any way we can facilitate what, I am sure she will agree, is a good aspiration without incurring a risk.

Will the Minister examine the general matter I raised in respect of EMI? I understand legislation in place in Britain obliged EMI to fill the deficit in its pension fund. As a consequence, those employees now have access to a fully paid up scheme and will be able to enjoy the pensions to which they have been making contributions. However, their colleagues in Ireland who have worked for the company for as long, if not longer, have been placed at a complete disadvantage. What happened in this instance seems to highlight a deficiency in our laws. Will the Minister see if she can identify whether the latter is actually the case and, if so, consider what action she might be able to take?

I feel strongly about another matter, in respect of which we have not tabled an amendment but which certainly should be considered in the context of the Bill. There is nothing to prevent the Minister from drafting an amendment on it. I refer to the issue of annuities. I am a member of a defined benefit scheme and at one point the annuity relating to it stood at 3%. In other words, if one had €100,000 in the scheme, one would get back €3,000 per year. I worked out at the time that it would take 25 or 30 years to recoup on the basis of the annuity the capital sum which the insurance company was going to get from day one. As a result, one would have to live well into ones 90s in order to recoup all of one's money. I think the annuity has increased and currently stands at 4% or 5%. There should be no requirement on individuals, be they members of defined pension or defined contribution schemes, to go the route of annuity. I understand, however, that they must do so under the law. That is wrong because it creates a windfall profit scenario for insurance companies. We should allow everyone to convert his or her pension entitlements into ARFs or AMRFs. If we were to do so, people would have the benefit of having their own pension pots and would be able to garner the proceeds from their investments in this regard. There is a need for regulation in this area. No one should be required to go the annuity route, regardless of his or her position. My information may be a few years out of date, but I recall that one was obliged to have more than 5% of the shareholding in a company in order to be able to convert one's entitlements. If one was under the figure of 5%, one was obliged to go the annuity route. I ask that the Minister give consideration to this issue.