Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the Acting Chairman for the opportunity to speak on the Bill. The introduction first of civil partnership and then of marriage equality has made a huge difference for many of our fellow citizens. The Bill introduced by Senators Bacik, Humphreys, Nash and Ó Ríordáin seeks to deal with an important legacy issue for a number of couples. I join with Senator Norris in recognising the Labour Party for its long-standing interest and commitment to equality for LGBT citizens long before it was mainstream. The Government is sympathetic to the Bill and has therefore decided not to oppose it. The Bill as drafted, however, raises some legal and technical problems and policy issues that need to be considered. These would need to be dealt with and teased out in further consideration of the Bill.

These provisions have been presented in different guises over the past few years as amendments to various pieces of legislation such as the Social Welfare and Pensions Bills, Finance Bills and equality Bills. The core issue is retrospective pension rights for same-sex couples. Under the provisions of the Pensions Act, people in civil partnerships, same-sex marriages and opposite-sex marriages are treated equally. The principle of equal pension treatment is that there shall be no discrimination on any ground in respect of any rule of a scheme compared with other members or prospective members of that scheme. Broadly speaking, pension scheme rules may provide that spousal pension benefits will be paid where the member has married or registered a civil partnership at the point of retirement within a specified time before or after retirement or at the point of death. As Senators have mentioned, these rules are sometimes referred to as gold-digger clauses, designed to protect older people and other scheme members from having to pay out spousal pensions that could stretch long into the future. Of course, such a clause could as much apply to a young man seeking to marry an elderly female, as in the example described previously, although perhaps this would be a graduate clause rather than a gold-digger clause.

As the law stands, there is no difference between opposite-sex and same-sex couples. In a scheme whereby spousal pension rights will be paid where the member is married at the point of retirement, if either a same-sex or opposite-sex couple marries subsequent to the member's retirement, no pension would be payable. In a scheme whereby spousal pension benefits will be paid where the member is married at the point of death, where a same-sex or opposite-sex couple marries subsequent to retirement, a spousal pension would be payable. In 2016, the Court of Justice of the EU ruled that it was not discriminatory for a pension scheme to refuse to grant a retrospective spouse's pension to a same-sex partner or spouse if civil partnerships were not recognised by the State during the relevant period.

There are a number of reasons the Bill gives rise to difficulties. Provisions that are discriminatory cannot be introduced, and any changes to a pension scheme might have to apply equally to persons in civil partnerships, same-sex marriages or opposite-sex marriages. The Bill could also give rise to constitutional issues. Article 15.1.1° of the Constitution states: "The Oireachtas shall not declare acts to be infringements of the law which were not so at the date of their commission." It is possible that this Bill, if passed, could be challenged on these constitutional grounds by affected pension schemes. There is also the principle of non-retrospectivity. Pension schemes cannot give benefits to members to which they are not entitled, and entitlements must be given by reference to the law in force at the time, not what we believe it should have been. Enacting retrospective legislation in this case could raise precedent issues in that it could be seen to offer an avenue to others who feel they have been historically discriminated against to demand subsequent law changes to seek redress at the expense of others. However, having listened to the debate, I think Senator Bacik has done well in her Bill to avoid retrospection and has tried to create a window of opportunity during which people could regularise their statements, this not being possible or legal previously. To disregard the European court's ruling that there was no discrimination in the circumstances in question is also a significant matter and could lead to calls to do the same in other cases. However, again, it is of course a matter for the Oireachtas to decide this on a case-by-case basis, and this could well be such a case.

Private sector pension schemes must have sufficient funding in place to provide the promised scale of benefits. They are unlikely to make provision for an occurrence that might not take place. Schemes do not in general make provision for the payment of a pension to a spouse or civil partner who does not exist at the time of retirement. There could also be additional legal, actuarial and administrative costs for such schemes.

Many pension schemes are struggling at the moment without the addition of further costs to the schemes. However, I accept that the numbers involved may be very small. Even in a very small scheme, however, many of which we have in Ireland - in fact, half of the occupational pension schemes in Europe are domiciled in Ireland - the costs may not be minor. For example, in the case of a small scheme designed on the basis that it will have seven or eight members, adding one or two more members to the scheme could have a very serious impact on what is left in the pot for the seven or eight who had been in it from the beginning.

There are thousands of people in both public and private pension schemes who are not covered for spousal benefits. Many of these made decisions about pension coverage based on their circumstances at the time, often for very understandable reasons. For example, a person who was separated and had no prospect of remarriage prior to 1996. Unfortunately, there are no "do-overs" in these circumstances, regardless of changes in society since they made their decisions.

The Bill would also make changes only for same-sex couples affected by these conditions. This could be viewed as preferential treatment for same-sex couples and might lead to opposite-sex couples requesting equal treatment. Although the Bill is for defined benefit, DB, occupational pensions, it could also create an issue for same-sex couples with annuities. If a person in a defined contribution scheme bought an annuity without a spouse's pension, would he or she now feel he or she should be able to purchase a spouse's pension as well? While I may personally feel that these clauses should be changed in all pension schemes, rules in general are a matter for the trustees, and changing them may have a significant financial impact, which we need to understand.Trustees may also argue that the legislation interferes with the property rights of their members. Equally, it could be argued that trustees should make these changes to their schemes.

I recognise the problems of the particular past circumstances of the people for whom the Bill has been designed. I am keen to find a way forward. One of the next steps is for the sponsors of the Bill to conduct a regulatory impact assessment. The Bill contains some drafting errors which they need to rectify. I am sure they will want to do so. Consideration needs to be given to how this legislation will interact or conflict with other provisions included in the Pensions Act. Cost implications are difficult to quantify on the basis of the Bill, as published. Unexpected or unintended costs arising from the Bill - costs to the pension scheme and future pensioners, rather than the Exchequer - could have effects on private and public sector pension schemes. These costs need to be calculated. My Department will certainly assist in that process.

It is right for this legacy issue to be dealt with. I am sure the sponsors of the Bill and all Senators will agree that it is crucial that a Bill with adverse or unintended consequences is not put on the Statute Book without understanding and accepting what the consequences might be. I urge the sponsors of the Bill to consider carefully the points I have made as they consider how best to make further progress with it. My officials and I will be available to assist in preparations for Committee Stage, or perhaps with a view to devising an agreed amendment to the forthcoming social welfare and pensions Bill.