Darragh O'Brien (Fianna Fail) | Oireachtas source

I formally second the amendment. I concur with what my colleague, Senator Jim Walsh, has said. This is the fundamental issue that my colleagues and I have with this Bill. The Long Title of the Bill is ambiguous because it highlights very clearly the double insolvency. It includes the additional wording at the end "to make additional provision for the restructuring of certain occupational pension schemes" etc. The issue is twofold. The Government has increased the pension levy to 0.75% from next year, which is a cash payment that schemes under pressure already have to pay. It has brought about a reduction in payment of schemes such as Tara Mines, Axa and various other pensions scheme because they have not had sufficient cash at hand and cannot realise assets to pay the pension levy. The increased levy which was to finish this year will now be 0.75% of the value of the fund and, apparently, will reduce further. This has resulted in Unilever pulling its whole pension fund out of Ireland from 1 January. I am sure those in the pensions unit of the Department have told the Minister that the fund which is in the region of €8 billion is made up of Irish and international assets. The fund had been managed here and is moving out of this country from 1 January and scheme members in Ireland have been advised accordingly. In the context of trying to assist schemes under pressure, what the Government is doing is increasing the charges on pension funds, full stop. The Minister for Finance, Deputy Michael Noonan, has imposed a significant change which is now 0.75%.

The nub of the issue is that we have a situation where public sector pensions, including my own, come from current expenditure where there is no fund and no real reduction in pensions given that the Minister for Finance tagged on an amendment to ensure there would be no major changes to such pensions. Effectively, what the Minister is saying is that for a person on €13,000 or €14,000 per year in a scheme where a solvent employer decides that as a party to the scheme the company will not inject any additional funds into a marginally under-funded scheme, it gives that employer a way out. The Minister will propose a 10% reduction in pension and payments in what is the most significant restructuring of private pensions that has taken place. I do not believe the public and, particularly, those pensioners who receive pension payments, understand what is being done here today and what the Social Welfare and Pensions (No. 2) Bill will do to their retirement pots, pensions and payments. If we allow this to go through without amendment a raft of schemes will seek to get out of their defined benefit arrangements and restructure the priority order but to reduce the pensions that are paid. I agree with the Minister that where schemes are under pressure and where a person who has got a year to go to retirement may have paid into the scheme for 30 years, that person will get a vastly reduced pension payment.

I wonder why in the Long Title of the Bill, particularly from line 12 onwards the Minister was not more prescriptive about saying that he would allow solvent employers with under-funded pension schemes to restructure their pension schemes for their benefit. I refer to the original point I made in regard to Senator Barrett's amendment, namely, that many of the charges, the fund performance and the mismanagement of schemes will be vested on those who have paid in for many years. Let us remember when we talk about priority orders, the reason they are in place is that those who are retired, generally speaking, do not have the ability to earn additional income. There could be people in their 70s and 80s who are receiving small pensions and on the basis of what is proposed, the Minister will be able to reduce those payments significantly and those people will not be able to earn any additional money. A raft of schemes will get out because all the major schemes are shutting down their defined benefit arrangements. This will lead to more schemes doing that and payments will be reduced further. The Minister does not have an easy job. I do not say there is a perfect solution but parameters should be set for a solvent employer. I wonder how the Department and the pensions board will look at this. I think they should be involved in the certification of such restructurings.

That annual amounts of between €12,000 and €60,000 can be reduced by up to 10% and annual amounts over €60,000 can be reduced by 20% is fine and well. I proposed to the previous Government in January 2009 that any future increments in the public and Civil Service should be on a defined contribution basis in order that a fund is built up for the vast bulk of the people, including ourselves, who work within the public and Civil Service. We cannot continue to have a situation whereby the measures are drastically changed for private pensions while doing very little with public sector pensions and continue not to fund them by way of a separate fund. That is an indictment of this and previous Governments because further disparity was created between gold-plated public sector pensions and now we are allowing people who have saved 50% or less for private pensions to effectively have their employers, by way of being scheme trustees, take the legs from under them and reduce the pensions they have paid into for many years. I do not want to detain the House too long because we want to push this amendment before 6 p.m. and there are two minutes remaining so I will conclude.