Darragh O'Brien (Fianna Fail) | Oireachtas source

If the Minister was going to bring about the changes proposed in the section, he should have introduced separate legislation. Having section 33 included in the State Airports (Shannon Group) Bill means it will bring about the most sweeping changes to private pension arrangements in the history of the State. It is the first time a Government has proposed legislation to change pension benefits in a private pension scheme. In my contribute on Second Stage, I spoke about the 15,000 members of the IASS pension scheme, made up of Aer Lingus, DAA and some former SR Technics workers. It is split in three, with approximately 5,000 active members, 5,000 deferred members and 5,000 retired members. Through the Department, an expert pension group has been set up and it is seeking feedback and interaction with the three groups. This relates to the deficit in the IASS pension scheme. Every Member is aware of the significant budgetary deficit within the scheme.

The Minister for Social Protection, Deputy Burton, introduced the Social Welfare and Pensions (No. 2) Bill and the Bill signalled what the Government was about to do to the pension scheme.

This pension scheme was one of many pension schemes whereby effectively people who had joined this scheme - by the way, they joined under compulsion - had to contribute to it. As a result of the deficit run up within the pension scheme, the Government is now proposing a drastic reduction in benefits and payments. This is a private pension scheme but, without any agreement having been made, the Minister is bringing forward legislation in this Bill which will allow him - I will quote some items within the relevant section - to transfer members out of existing pension schemes to wherever he wishes them to go. It will allow the Minister to vary the benefits or promised benefits in payment.

Let us all recall that this is a defined benefit pension arrangement. People signed up for this on the promise of receiving certain benefits at retirement, including a guaranteed percentage of final salary and a guaranteed lump sum. I have a major problem with this because over the course of the years - I mentioned this on Second Stage - and during the terms of successive Governments, Aer Lingus has used this pension scheme as a vehicle to entice people to retire early from the company. Following my research into the matter it is my view that the company was offering unco-ordinated pension benefit at early retirement. This meant the company was not deducting the social welfare, old age pension or contributory pension amounts, worth anything up to €12,000 to people who retired early, to encourage them to retire early from the pension scheme. In no way have any of the benefit statements - I will discuss the benefits statements, the actuarial valuations and so on - shown that any specific payments were put into this scheme to cover the early retirements of staff who remain part of the scheme from Aer Lingus, the Dublin Airport Authority or SR Technics. The company has benefited from the early retirements by reducing staff costs to the detriment of the pension scheme.

Certain Government proposals are not in this Bill but will be copper-fastened by what the Minister for Transport, Tourism and Sport and his Fine Gael and Labour Party colleagues are proposing to do. Let us suppose someone is within a year of retirement - I have received cases and I imagine the same people have written to the Minister - has paid into his or her pension schemes for 38 years and is expecting a certain amount at retirement. Now, based on the proposals of the Government, such people will have a 50% reduction in the pension benefits and retirement benefits they are due to receive in the next year or two.

Valid criticism has been made by the Retired Aviation Staff Association, RASA, and the deferred pensioners committee. They do not have a seat at the table, they have not been represented by the employer and they certainly have not been represented by the unions. These are people who are no longer employed by any of the three companies to which I referred and they are no longer union members. Therefore, they have no one to speak up for them.

This is the purpose of our opposition to the section. At the least we believe this section is premature because the Minister has not come to a final arrangement with regard to what he will do with the Irish airlines superannuation, IAS, scheme. This section will be the biggest stick to beat anyone at negotiations.

The proposed section 32A (11)(b) states, "The consent of the members or of a company or other employer participating in the IAS scheme or of any other person referred to in any provision of the IAS scheme shall not be required by the trustees for the exercise of the powers conferred on them by this subsection." This means the members need not give consent to be removed from the IAS scheme. No consent is required. This has never been done to any private pension scheme. Never has such Government legislation been brought in. This is a Government Bill to vary the benefits and remove the perfectly legal pension entitlements of thousands of members of this scheme. Now, we are removing their consent. The Government is conferring on the trustees the absolute power to remove members from these arrangements.

The Minister will have received correspondence, as will his colleague, the Minister for Social Protection, Deputy John Burton, who brought about these changes in the Social Welfare and Pensions (No. 2) Bill.

Why this is important is that the Minister is allowing a scheme to be wound down in a single insolvency where there is a solvent and profitable company. Aer Lingus is a solvent and profitable company, thank God, but because it has an insolvent pension scheme the Minister is allowing it to wind down the scheme, without insisting on any real payment to deal with the arrears and the deficit in the scheme, even though it is a profitable company. At the time the Social Welfare and Pensions (No. 2) Bill was brought before this House I put the Minister, Deputy Burton, on notice that this would happen with the Aer Lingus IAS scheme. That Bill was actually prepared over 18 months ago but the Minister pulled it at the time because word emerged that that was going to happen. My point is that the employer had advance notice that this was going to happen.

By passing this section the Government is giving free rein to the employer and to the Minister, as a major shareholder within the company, not to deal with the deficit in the pension scheme or, at the very least, to deal with only a small part of it and to write off the rest of the deficit. It will be written off, first, by reductions in payments to retired people. These are people in their 70s and 80s who have paid into the scheme and are retired and who have no ability to earn additional income. Second, the Minister is saying to the people who paid into the scheme over the years that despite what was promised to them under the laws of this country and under the rules of the pension scheme to which they signed up and contributed, the benefits due to be paid to them can be reduced by up to 50%, as some claim. Whatever the final figure is, the Government can insist on that happening. Not only that, the Minister can remove them from the scheme because he is setting up a new scheme for the existing members. The new scheme will be put in place and approximately 10,000 people, who have nobody to represent them at the table, will be left with this.

Can the Minister name one other private pension scheme where the Government has introduced legislation to remove the entitlements of its members? I cannot find any. I believe this is setting a really dangerous precedent. It is also causing immense distress to thousands of people who live in Dublin and in Shannon and who were expecting a certain level of income at retirement but now, based on the proposals we are hearing, it will be less than 50% of that.

When a person is a deferred member of a pension scheme, he or she is entitled to access to the trustees' annual report. The deferred pensioners committee and many of those deferred pensioners have told me that over the years they have not received copies of the trustees' annual report. They have also not received the benefit statement to which they are entitled under the Pensions Act 1990. The actuaries for part of this scheme were KPMG and one of the individuals who was an auditor of the scheme is heading up the Minister's expert committee in respect of the restructuring of the scheme. I will not mention the person's name and I am not impugning that individual at all. I am sure that individual is well capable and has the experience to do this. However, consider where the suspicion lies with people who say they never got a benefit statement when they were a deferred member and did not get access to the trustees' annual report. The company will still not tell them how much money was paid out for early retirements and whether any requisite payment was made by the company to fill the hole made by the incentives for early retirement for people from this scheme.

The company used this scheme as a vehicle to reduce its own costs. It has done that successfully and I welcome the fact that the company is a profitable company. We all want that to be the case. However, who is paying for this now? It is the retired members and the deferred members. I am anxious to hear the Minister's logic for proposing this. This is such a major change that, in my view, it should have been proposed in a separate Bill. I ask the Minister, even at this late stage, to withdraw section 33 in its entirety. It is premature to include it now while discussions are still ongoing as to how the deficit in the IAS scheme can be dealt with.