Averil Power (Fianna Fail) | Oireachtas source

I will begin by addressing recommendation No. 8, which is the crux of the issue in terms of the IASS and other schemes, namely, the single insolvency situation. As Senator O'Brien said, it stems from the legislation the Minister brought through the House which we opposed at the time, namely, the Social Welfare Bill. The OECD has made a recommendation that a defined benefit pension scheme should not be allowed close unless it has received a minimum of 90% funding standard. We put forward this amendment last year as well in anticipation of what would happen with the IASS. The Minister rejected it at that stage but I hope that given the consultations she has had with IASS members and the correspondence she has been receiving, and meeting with the members personally, she will come to this debate with a more open mind.

Whatever about a double insolvency where both the scheme and the company are insolvent, to be able to close down a scheme in a single solvency situation, against the advice of the OECD, which recommends that there be 90% funding, is wrong. There is no minimum funding requirement in our legislation, and we are seeing the impact of that now.

I agree with the comments made earlier. The IASS is the first scheme that has been hit by this but the template set out in the Minister's legislation, and in the Shannon Airport Bill brought forward by the Minister for transport, provides for future savage cuts on members of other pension schemes. That is a dangerous departure. It is extraordinarily unfair. In terms of the IASS scheme it is unfair to pensioners who are losing six weeks pay every year. That is a phenomenal cut more savage than any of the social welfare cuts or other cuts brought before this House. Six weeks pay is a huge amount for people on a pension to lose when they are already on a reduced income.

Active and deferred members are losing 50% to 60% of their pension. That is extraordinary, particularly for people who are on low income. These are not well-off pensioners. Many of them are on very modest incomes who worked for a long time and made contributions. Many of the active and deferred members were persuaded to leave the company and assist with its restructuring on the basis that their pension benefits would be preserved, but now they find out that that promise was not worth anything and that they will lose 50% or 60% of their pension. I know the Minister met some of the individuals involved. I hope she will show some heart and do something about this. It is within her power. I do not know how the Minister or anybody else could listen to their story and not be moved by it.

It is absolutely incredible that any Government, but particularly one including the Labour Party, would preside over such a savage cut to people's pension entitlements. These are people for whom it is too late to make up the income elsewhere. Many active members are within months of reaching retirement age and their pensions are being cut by 60%. This is extraordinarily cruel and unfair.

Senator Cullinane mentioned the resolution to the Waterford Crystal matter and I welcome the fact that this issue has finally been resolved. We now have a bizarre situation whereby the Waterford Crystal workers, who were in a double insolvency, are now better off than Irish airline superannuation scheme, IASS, members. The Waterford Crystal workers had to fight through the courts to get their entitlements and reach this position, but after all of this they are better off than the IASS members. The Minister should pause and reflect on this. Does this mean the only way IASS members will get their entitlements is to take similar legal action against the State? I was at the Retired Aviation Staff Association, RASA, AGM last week where this was spoken about as one of the options on the table. It will take legal advice on taking on the State on this issue. The direct facts of the Waterford Crystal case are different, in that it was a double insolvency rather than a single insolvency and referred to active and deferred members rather than pensioners, but many of the principles are the same and there is EU protection for pensioners in cross-border schemes. Has the Minister taken this into account in the wake of the resolution of the Waterford Crystal issue?

As Senator O'Brien stated, ideally we would like to see the Government row back on this and see the injustice in cutting people's pensions so severely, particularly in insolvency situations. If this is not possible and the Minister is not willing to implement the OECD recommendation for the IASS scheme to be 90% funded, we have tabled fairer alternatives with regard to the distribution of pension benefits which would ensure fairer protection for people. In recommendation No. 11, we set out criteria which would apply instead and would give people fairer protection. It would amend the Social Welfare and Pensions (No. 2) Act introduced last year to ensure the reduction in preserved benefits for members with accrued service in excess of 20 years would be made as follows: where the annual amount is €12,000 or less no reduction would be made as this is a very modest pension; where the annual amount is greater than €12,000 but less than €60,000, the reduction in such an amount would not exceed 10%; and where the annual amount is €60,000 or more, the reduction would not exceed 20%. We believe this would be much fairer. It would be in line with how much money people actually have. It would provide stronger protection for those on the lowest incomes. The recommendation also provides that where the reduction to which I referred would result in the annual amount being reduced to less than €12,000, it would be reduced to €12,000; and where the reduction to an annual amount of €60,000 or more would result in it being reduced to less than €54,000, the reduction would operate to reduce it to €54,000. This is based on ensuring greater fairness. It would be much fairer than what the Minister has in place.

The other recommendation deals with an appeals process, which is an important aspect of natural justice under our Constitution. People have an ability to appeal decisions which affect them and should not have to go to the courts to do so. We should provide in our procedures an open and fair appeals process, and recommendation No. 9 sets out to do so. I second the remarks made by Senator O'Brien in respect of each of these recommendations and I hope, that having consulted with the members of the IASS scheme and listened to how these changes affect them personally and the great unfairness being introduced, the Minister will act before it is too late and have a proper debate with us, find a fairer solution and find a way which does not leave people on low incomes losing 60% of their pension.