Joan Burton (Dublin West, Labour) | Oireachtas source

I will comment briefly by stating I understand the Senator's intentions. However, for a company in which a debt is placed on an employer, from a particular legal perspective this may have consequences for the employer in the sense there now is an enhanced obligation. This may well have consequences on the employer's overall balance sheet position, fund-raising capacity and debt capacity. On the other hand, the Government is trying to nurse schemes that are in difficulties back to a state of health. One measure that was launched successfully two years ago with the National Treasury Management Agency was a specific bond which has been subscribed to and which is based on a basket of securities offered by the NTMA and for those organisations that invested in this mechanism, it actually has resulted in highly attractive returns. I understand the ESB pension scheme was one scheme that took up that option.

However - this is the important issue - I refer to the difference between the United Kingdom and the United States on the one hand and Ireland on the other. In the case of the United Kingdom, the United States or individual states therein, one is talking about much greater population concentrations than is the case in the Republic of Ireland. When one has such a concentration of population, the level of risk can be spread much more widely. In the case of companies in Ireland, many companies here with defined benefit pension schemes are relatively small in financial terms.

Certainly by international comparison, those small companies may be heavily reliant on borrowing for capital purposes. I suggest that what the Senator is proposing may well have consequences for them because, of course, pension liabilities when crystallised, which is the way modern accounting standards tend to approach pension liabilities as opposed to their being dealt with over a very long period of time, can quite rapidly result in very heavy burdens on relatively small sized companies and can have consequences for their financial viability. I am afraid that is a fact of life. We have to balance this against what the Senator is saying.