Darragh O'Brien (Fianna Fail) | Oireachtas source

Amendment No. 2 seeks to amend the State Airports (Shannon Group) Act 2014, by the insertion of a new section 34A to provide that the IAS scheme shall not be allowed to close its pension scheme except where the scheme has reached a minimum 90% funding standard. We discussed on Committee stage the general thrust on any scheme not being allowed to be rewound should it have not reached 90% funding. This would mitigate against what happened in relation to the IAS scheme, whereby the scheme was run down over two years, during which time the scheme deficit doubled from €350 million to over €700 million, resulting in the employer and the owners, which included a 25% shareholding on the part of the State, being allowed to write off a liability of €760 million.From there, the State was able to sell its stake for €342 million on the back of the pension scheme members - active, deferred and retired - who have all suffered severe cuts under this scheme. It is now the case in most western European countries, including the UK, that a scheme cannot be wound down unless it has reached a 90% funding standard. That is a very important benchmark to set down. As a result of the Social Welfare and Pensions Act 2013 and the State Airports (Shannon Group) Act 2014, every major employer in this country with a sizeable pension scheme, particularly those with defined benefit schemes, is now shown how to get out of its liabilities. Such employers can run the scheme down, apply to the Pensions Authority and say that it scheme is underfunded, pull the rug out from under the members who have paid in - many on a compulsory basis since they became employees - and reduce their benefits. Who profits from this? The answer is the shareholder and the owner. This is going to happen with other commercial semi-State companies and it will also happen with private companies. Those who advised the Government and the trustees on the IAS scheme are advising other companies across the State. This is the first time any Government has legislated - in this instance, under the State Airports (Shannon Group) Act 2014 - to change a private pension scheme. That never happened before.

What was done - namely, the enactment of the State Airports (Shannon Group) Act 2014 and the Social Welfare and Pensions Act 2013, which brought in single insolvency - has had massive ramifications for 15,000 families across the country and it will have a similar impact on tens of thousands of others. I will not detain the House but I remind Senators that single insolvency is where a profitable company with hundreds of millions of euro in the bank can wind down its pension scheme and, effectively, extract its own liabilities from that scheme overnight. That is what is happening. A double insolvency involves an unprofitable company with an unprofitable pension scheme, as was the case with Waterford Crystal. In many instances, when a company is not profitable and when it and its pension scheme are making a loss, benefits are reduced and everything cannot be paid out in one go. People understand that situation. However, profitable companies are being allowed to shirk their responsibilities and a roadmap has been set down in legislation for every major employer or small employer to do the same. This is the first scheme in respect of which what I have outlined has happened. It is important to include in the Bill a stipulation to the effect that "The IAS Scheme shall not be allowed to close its pension scheme except where the scheme has reached a minimum 90 per cent funding standard." because this will set down a marker for others. I intend to press Amendment No. 2. Will the Minister of State indicate what is wrong with setting a 90% funding standard?