Joan Burton (Dublin West, Labour) | Oireachtas source

As I said, many of these difficulties have their origin in the peculiarities of the bank guarantee, the state of the economy and the suspension of the funding standard. I think people expected it would be all over by Christmas. Not only was it not over by Christmas, the situation continued for an extended period. What we are trying to do in the legislation is to allow schemes to restructure. There has been agreement on both sides of the House that if a scheme has an inherent viability, a restructuring plan would allow it to recover. We have examples of a great deal of work being done by trustees, by the members and representatives of trade unions and by employers in producing plans to restructure schemes in order that they become successful.

At the outset of the debate I said that 40% of schemes have been involved in a successful restructuring process but about 20% of schemes have a serious difficulty. As Senator Darragh O'Brien knows, some of those schemes are very small, whereas others are very large with hundreds, and in some cases thousands, of members. The objective is to try to get the schemes to the best place possible. That is the reason we are providing in the Long Title and in the details of the Bill an additional basis for restructuring. An example was given during the Second Stage debate of people ranging from 62 to 64 years, current active members still in employment or deferred members who had taken a redundancy deal and were now approaching retirement age who would be entitled to nothing without some kind of restructuring. The existing pensioners, including friends who had retired at age 65 a few years previously received all the benefits, while the active staff and those with deferred pensions would be entitled to nothing. There was wide agreement on Second Stage to see what could be done while achieving the maximum protection.

One thing that was not mentioned in the contribution is that we are protecting people with pensions of less than €12,000. All the information is that a significant proportion of the members, those still active in the workforce and those who have deferred entitlement in the various pension schemes, in particular some of the larger ones, are in that category. In addition, a significant number of the members of such schemes have access to the State retirement pension. That is worth roughly €12,000. If somebody has the State retirement pension, he or she is also protected in terms of their defined benefit pension up to €12,000. Many people in defined benefit schemes have entitlements significantly below €12,000. The combination of the State pension and defined benefit pension of €12,000 would give them a retirement pension of something around €24,000. As a proportion of the average industrial wage, which is somewhere in the region of €34,000 to €36,000, a retirement income of up to €24,000 would be deemed to be a significant provision. It may not be all that people want and we had an earlier discussion on the advisability of saving more in pension schemes. We are trying in this legislation to help the maximum number of pension schemes to meet a funding restructuring requirement that will give them sustainability that will cover the current active members in employment and those who have deferred entitlement. Many organisations have made changes in their pension schemes from defined benefit schemes to defined contribution schemes Younger people simply join defined contribution pension schemes.

I was asked about future pension regulation. What is happening in respect of defined contribution pensions will become an issue because of the difficulty of individuals managing their own pension fund. I commissioned and published a report on pensions which showed that charges for people in pension funds are very high. As has been said, the decisions are not easy. I have exhausted the time. I want members to understand that the purpose of the legislation, on which there has been significant consultation and debate, is to provide for sustainability for the maximum number of funds through restructuring, if necessary, and to provide specifically for the double insolvency situation in the context of the EU directive.