Joan Burton (Dublin West, Labour) | Oireachtas source

Senator Darragh O’Brien recalled the time when the late Minister for Finance, Brian Lenihan, took a whole series of pension schemes along with their assets and liabilities, onto the State’s balance sheets. I think it was the first time I heard of the practice of giving people extended years, which seemed to be fairly common in universities, not in institutes of technology or the Dublin Institute of Technology, where I worked and never heard of it. There had been rumours about it but the Minister was not the only person to be surprised at how liberal that practice was. That had huge implications. In answer to Senator O’Brien’s direct question, they are in effect State schemes, taken over by the State. The Economic and Social Research Institute, ESRI, was also drawn in and the State took over its pension scheme.

In this case we are providing for a double insolvency, that is where the firm and the scheme are insolvent. We rather hope that will be a relatively rare occurrence as it has been in the past, the most notable example being Waterford Crystal. Since 2008 an EU pensions directive places certain obligations on the Irish Government. Waterford Crystal is involved in an ongoing legal case. The rules we are putting in place are to provide in future for the double insolvency. This means that the firm is insolvent.

In the legislation we are providing for the draw-down of the amount required to cover the shortfall in the resources of the scheme. The Minister for Finance, on behalf of all taxpayers, covers that shortfall on certain very clear conditions and application, via the Pensions Board and the Minister for Social Protection on application to the Minister for Finance. Sub-section 48(a) provides for: the certification of the shortfall in scheme resources by the scheme actuary in accordance with statutory guidance issued by the Pensions Board; application by the trustees of the pension scheme to the Pensions Board to certify the shortfall in scheme resources, in accordance with statutory guidance issued by the Pensions Board; and certification of the amount by the Pensions Board where the board is satisfied that the trustees of the scheme have complied with statutory guidance and with guidelines issued by the Minister.

Two requirements are being drawn up and will be published. That is where I believe the spirit of the amendment is important. The statutory guidance and the guidelines, which will be drawn up and issued by the Minister, are being worked on as we speak in regard to the application by the trustees of the scheme to the Minister for Social Protection to request the Minister for Finance to discharge the amount certified to the trustees of the pension scheme. It is an application process to ensure the interests, if one likes, of the pensioners, both active and deferred, are protected to a certain degree in the event of a double insolvency, which includes the insolvency of the company. I will make that request to the Minister for Finance where I am satisfied, as Minister, that the guidelines I have made in this regard and the statutory guidance issued by the Pensions Board have been complied with.

The statutory guidance is issued by the Pensions Board and will set out the technical details in regard to the certification of the shortfall in scheme resources and in regard to the form of the application required when applying to the board to certify the amount of the shortfall. That is being worked on and will only be finalised and published after this legislation has been passed. There are the guidelines issued by the Minister in regard to the certification of the shortfall by the Pensions Board. The statutory guidance and the guidelines are the detailed working operation of how this issue is to be dealt with in a double insolvency. The issues raised in the amendment go back into the history of the scheme and, in some ways, we could almost say it is a summary of what went wrong and what they were less than prudent about, and so, for historical reasons, we ought to be told about it. I would prefer to reflect that in the statutory guidance to the Pensions Board and in the guidelines for the reason that, because it is a double insolvency where the company itself is gone, it may be difficult in some cases to go back for the detailed information that is being talked about in the amendment.

I am happy to consider the points that have been made by the Senators and I take those points as being very well made. The purpose of what we are doing in the legislation, however, is to transpose the EU directive into Irish law to give the people in the pension scheme the protection of the directive. As has been said, it would be important that we would learn from what happens in these cases. In some ways, that is probably the purpose of the amendment, which deals with the issue of moral hazard. As with all these inquiries into what happened, there is probably a vicarious satisfaction in getting the information, and some of that may have other consequences. We also want the information to learn how to avoid this in future.

I understand the point the Senators who proposed the amendment are making. I will undertake to do that but I would prefer not to have it in the legislation because the legislation is to deal with the actual double insolvency. Given that double insolvency involves the insolvency of the company, to have a legal requirement to go back, as it were, almost to undo or to find out everything that happened could, in certain circumstances, be difficult, if not impossible. I will certainly undertake to seek to reflect what is being said by the Senators in the statutory guidance and the guidelines. That said, I would prefer not to take it into the legislation for the reasons I have outlined.