Seanad debates

Wednesday, 25 November 2015

Social Welfare and Pensions Bill 2015: Second Stage

 

10:30 am

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail) | Oireachtas source

I welcome the Minister of State. We will have more time for debate on Committee Stage. My party spokesperson, Senator Mooney, outlined our main issues with the legislation and the aspects that we welcome such as the restoration of the respite care grant. I acknowledge that this cut was difficult for Government colleagues, particularly Senator Moloney, who fought hard for the restoration of the grant. I commend her on that. It is only right and proper that we say so when we agree with aspects of Government policy and legislation and I have done this during consecutive budget debates. I will recognise good measures but I will also, in my role as Opposition leader, highlight areas where something could be done differently.

I would like to focus on pensions, which comprise a small element of the Bill. I will table amendments in this regard. One issue relates to section 23 and this might have been lost within the Bill. The section amends section 128 of the principal Act. It looks to me that the Government proposes to merge the Financial Services Ombudsman with the Pensions Ombudsman. That is a retrograde step. Pensions are a massive issue. The State's pension liability is multiples of the banking liability but successive Governments have kicked this problem down the road and I do not just lay the blame at the door of the Government. That is a dangerous step forward because there needs to be a better and clearer focus on pensions into the future. If I am correct, section 23 proposes subsuming the Pensions Ombudsman into the Financial Services Ombudsman but the officials can tell the Minister of State before he replies. We will not agree to that and I have tabled amendments to delete the section.

In the 2013 Act, the Minister provided for single insolvencies of pension schemes, which allowed solvent profitable employers to run down their pension schemes and walk away, particularly from defined benefit schemes in which they had amassed huge liabilities. We had proposed that a solvent firm should not be allowed to close a defined pension benefit scheme except where the scheme had reached a minimum 90% funding standard. That is what happens in the UK and many other European countries. The Government relaxed those rules and, lo and behold, the airport pension scheme, the Irish airlines superannuation scheme, IASS, came tumbling down and retired members lost six weeks of their pension and long-serving deferred members lost up to 60% of their entitlements. That was facilitated by the Government's Social Welfare and Pensions Act 2013. I flagged it at the time. That is a major problem not just for the worker within the IASS and I will table amendments to deal with these issues on Committee Stage and to reverse some of the decisions made by Government under the State Airports (Shannon Group) Act 2014. I will table an amendment to reverse the unilateral removal of those members from the scheme and the unilateral reduction in their scheme benefits. That was allowed to facilitate the sale of Aer Lingus for a paltry €343 million. All these pensioners have been left swinging in the wind. No one agrees with what happened to them. My principal concern is that unless this is amended, this will happen to multiple other pension schemes, both semi-State and private. This is happening because the Government has given a road map to employers on how to run down a defined benefit scheme. People are promised a benefit on retirement based on the contributions they made but employers can extricate themselves from this commitment to their employees and set up a new scheme while writing off the deficit, thereby making the company more profitable and saleable if it is commercial semi-State company or allowing a private company to walk away from its pension responsibilities. That is a serious issue and it is for reasons such as this that the two ombudsmen should not be merged but, more importantly, I am concerned that thousands of other workers will be affected in addition to the 5,000 retired and deferred pensioners in the IASS. They were the first and there will be more unless this is changed.

The pensions industry in Ireland is small and all the pension experts and the various companies affected know this option is available. The Government provided for this under legislation the Minister of State brought through the House. We have an opportunity in the final few months of this Government to reverse that bad decision and to make sure this does not happen to any other people who are entitled to their pensions. It can be easy for us as public representatives and for departmental officials who contribute to pensions for which there is no funding as they are paid out of current revenue. I am talking about people who are members of pension schemes, which are being ripped up and torn asunder because of legislation introduced by the Government. I will table four amendments to undo the bad work that has been done on pensions.

If I am correct about section 23 and the merger of the two ombudsmen, I ask the Minister of State to revert to the Minister and ask for the Government to reconsider that decision. In 15 or 20 years, whether we are here or not, the State will be dealing with a much greater pension liability, which we all keep kicking down the road because it will materialise between 2030 and 2035. We are responsible for forward planning as well. I thank the Minister of State for his attention and I look forward to his response.

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