Jim Walsh (Fianna Fail) | Oireachtas source

I move amendment No. 7:

In page 15, between lines 39 and 40, to insert the following:
"11. Section 50 of the Principal Act shall be amended by inserting a new subsection (1A) as follows:“(1A) The pensions board shall not direct the trustees of a pension scheme to reduce the benefits of current and former scheme members and/or post-retirement increases in benefits for pensioner members where a sponsoring company or its parent company have the financial capacity to meet the under-funding in the scheme.”.”.

With regard to the double insolvency, obviously the trustees are empowered to reduce the benefit of the current and former members. The Long Title has caused us a little confusion because it strongly emphasises the insolvent companies, but it deals with the single insolvency, which is the fund, just by restructuring. It is understandable and logical given what the Minister is endeavouring to do in this Bill that the trustees of the scheme would be in a position to reallocate the funds in accordance with the legislation in a double insolvency. However, in a single insolvency, which is where the fund is in trouble but the employer is doing fine, the same powers are given.

This comes down to a strong position on equity and fairness. I do not accept the Minister's response to amendment No. 1, that it would somehow disincentivise employers from taking the defined benefit route. There are probably no new defined benefit schemes being created at present by companies. If there are, they are minuscule. In fact, many defined benefit schemes are morphing into defined contribution schemes. There is nothing fundamentally wrong with defined contribution schemes, provided the employer makes a fair contribution, the employee does likewise and the fund is managed properly. In addition, crystallising the benefit to the employee will attract others to follow that course. I mentioned mutual funds on the last occasion we discussed this and the Minister acknowledged that they work very well in the United States. I recall meeting people who told me they had never appreciated that they would accumulate the amount of finance they had. They did it through mutual funds.

I believe that is a good concept. Indeed, some of these funds have acted to guarantee the money in the funds, for example. We talk about unit trusts and so forth, but the State is borrowing money all the time. It will borrow on the bond market. Perhaps there is a way the State can use some of the available funds for investment here, by guaranteeing an appropriate level of funding, which might be modest but would be commensurate with the low risk involved. There are real opportunities here to develop that.

To return to the amendment, if I am an employee of a company that is in financial difficulties and the pension fund is in difficulty, I must accept what is being prescribed in the legislation. If I am a current employee, it is a benefit to me and if I am retired, it will affect me because my pension will be cut. That is an entirely different situation from one where the defined benefit scheme in a company is under-funded, but the company is doing exceptionally well. Due to increasing profits, margins or whatever else, it decides, as many employers have, that there is risk attached to the defined benefit scheme and accordingly closes it down. There must be some protection for the employee in that regard, but there is none in this Bill.

The Minister is facilitating successful companies, perhaps even multinational corporations. I gave the Minister an example on the last occasion, the EMI scheme. It is a disgrace. I also asked the Minister to find out if there is a disparity between the law here and the law in Britain. A total of €200 million was injected into the pension fund in Britain and all the employees there were beneficiaries of that as their pensions are fully funded. The employees of the same company in Ireland, however, many of whom had long service, found their pension fund was not funded. There was no need for the company to put the money into it. It was a small amount of money. If memory serves, I think €12 million would have been sufficient, compared with the €200 million. It would be neglectful of the Minister, people working in that section and the Members of the Oireachtas to allow that situation to continue. It is unfair and wrong.

I intend to press this amendment. If the Minister refuses to accept it, I urge her to outline the logic for doing so. I do not accept the point the Minister made. Where companies are viable, as I said on Committee Stage, criteria could be laid down to determine what the financial profile of the company would be so it could meet this requirement. There must be some statutory obligation on such companies. We cannot permit a situation where unfortunate people who have served a company for 30 or 40 years are totally disadvantaged. I refer to a quotation which is on the back of my card. It has a great deal of resonance for me, as a member of Fianna Fáil, as I hope it would have for a member of the Labour Party and a Government Minister. The quotation, from Pedro Arrupe, is, "Let there be men and women who will bend their energies not to strengthen positions of privilege, but, to the best extent possible, reduce privilege in favour of the underprivileged".

That is a guiding principle we would do well to follow. I ask the Minister to think about that because we are disadvantaging employees and employers, some of whom are multinationals, such as the one I mentioned.

I would welcome an answer in respect of the EMI situation and the position regarding the laws in Britain as against the laws in Ireland which obviously worked against a number of employees here as a consequence of what happened within that company.