Denis O'Donovan (Fianna Fail)
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Can I have order please? Members might resume their seats, as otherwise, they may state they have not heard me. Before we commence, I remind Members that a Senator may speak only once on Report Stage, except the proposer of an amendment, who may reply to the discussion on the amendment. On Report Stage, each amendment must be seconded.

Darragh O'Brien (Fianna Fail)
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I move amendment No. 1:

In page 16, after line 35, to insert the following:

“26. The Pensions Act 1990 is amended by inserting a new section 48A as follows:“48A.An appeals mechanism for pension scheme members shall be put in place where trustees have decided upon reduced benefits for members, and such appeals mechanism shall ensure that any category of such pension scheme members have not been unfairly treated in any restructuring arrangement.”.”.

Mary White (Fianna Fail)
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I second the amendment.

Denis O'Donovan (Fianna Fail)
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Does Senator Darragh O'Brien wish to speak on the amendment?

Darragh O'Brien (Fianna Fail)
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Yes I do. Amendment No. 1 would put in place an appeals mechanism for pension scheme members where trustees have decided upon reduced benefits for members, and such appeals mechanism could ensure that any category of such pension scheme members have not been unfairly treated in any restructuring arrangement. At present, as Members are aware, deferred and retired members in particular generally do not have a seat at the table and a particular instance of this was with the airport pension scheme, that is, the Irish aviation superannuation, IAS, scheme. It makes absolute sense to put in the Social Welfare and Pensions Bill a provision for an appeals mechanism in respect of any scheme member who feels that he or she has been disproportionately affected by any restructuring in the pension scheme. I gave the example of the deferred pensioners in the IAS scheme, many of whom suffered cuts of up to 60% in their provision. I am sure the Minister of State will have received correspondence on the matter with factual information from those concerned. They have not had any mechanism to appeal the move. There has been nothing bar writing to trustees and stating their cases. It is a particular problem for retired members who are generally not represented by their trade union. Again, in the situation of the airport pension scheme, one of the unions was particularly disgraceful because it returned union subscriptions to its retired members. These are people who had been members of the union for all of their working lives. The union took such action simply on the basis that it was trying to get the best deal for its active members who were continuing in the scheme. Therefore, an independent proper appeals mechanism would be a way forward and that is why I have tabled my amendment. Its aim is to ensure that other schemes cannot have a situation where their scheme needs to be restructured. I argued the toss on the IAS scheme in that I did not believe it needed to be restructured as it is, but that debate is for another day. My amendment would give some recourse to scheme members. I am interested in hearing the views of the Minister of State.

Kevin Humphreys (Dublin South East, Labour)
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We had a long discussion on Second Stage on pensions. This issue is very close to the Senator's heart. I also know that as he has previously worked in the area he has considerable expertise in terms of what is involved. However, I do not propose to accept his amendment at this stage. I agree with the Senator that we need to keep the pensions area under constant review. Recently there has been a change in the mechanisms used to deal with pensions and I shall go through one or two of them briefly. I am aware the Senator is quite and expert in this area.

Darragh O'Brien (Fianna Fail)
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I would not say that.

Kevin Humphreys (Dublin South East, Labour)
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I mean what I said. The Senator has worked in the area.

Denis O'Donovan (Fianna Fail)
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Is the Minister of State building up the Senator for a fall?

Kevin Humphreys (Dublin South East, Labour)
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Never.

Darragh O'Brien (Fianna Fail)
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He is the expert.

Kevin Humphreys (Dublin South East, Labour)
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Trustees must notify in writing the scheme members, any persons receiving benefits from the scheme and the trade union or representative groups representing scheme members before they make an application to reduce benefits to the Pensions Authority. Once notified, the scheme members or those representing the scheme members are entitled to make written submissions to the Pensions Authority which will consider any submission prior to making a direction. Groups representing the interests of pensioners and deferred scheme members have a right to appeal a direction by the Pensions Authority to the High Court on a point of law, which rarely takes place. I remind the Senator we have had that discussion previously. Earlier this year, the Tánaiste and Minister for Social Protection approved measures to facilitate engagement between the trustees of a pension scheme and groups representing the interests of pensioner and deferred scheme members.

Recently measures have been created and guidance has been provided for trustees. There is a need for further engagement with trustees and maybe assistance and guidance. I accept that we must and should keep this matter under review. If current mechanisms prove that they are inefficient or incapable of dealing with the matter then we may look at introducing an appeals mechanism, as proposed by the Senator. At this stage I do not accept the amendment but I shall ask my officials to constantly keep this matter under review. If it is felt necessary, at a later stage, or it becomes apparent that there is a need to have such an appeals mechanism, then we will come back to the Senator. I reassure him that we will keep this matter under constant review. I thank him for highlighting the matter and making the argument for same.

Diarmuid Wilson (Fianna Fail)
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I welcome Deputy Noel Grealish and his party to the Visitors Gallery.

Darragh O'Brien (Fianna Fail)
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I wish to respond to the comments made by the Minister of State. I appreciate his response and its bona fides. However, the reality of the situation is that we have living proof of what has happened to specific groups of pension scheme members. They have been disproportionately cut yet had no recourse. In many instances, particularly with larger companies, while the trustees belong to a separate body from the company and the scheme is held under trust as a separate entity to the company, the reality is that all of the weight and power is vested with the employers and also with the current employee representatives. The provision has not worked and will not work currently as it stands, which is proven by the IAS scheme. Opposition to an appeals mechanism is probably due to the fact that the Seanad and the Government do not want an amended Social Welfare and Pensions Bill to go back to the Dáil because of the legislation programme of the Dáil.

I have debated this matter at length with the Tánaiste and Minister for Social Protection although we have not had any engagement since the wind-up of the IAS scheme, which I do not take personally. I do not think it is coincidental either that she does not propose to attend the House this week to take any Stage of the Social Welfare and Pensions Bill. I appreciate the Minister of State's direct engagement with the Chamber and know that he has listened to us but I will press my amendment. The only way to have a proper appeals mechanism is to have it written into law. Unfortunately, in many instances when a member writes to a scheme's trustee it is not worth the paper it is written on. If the trustee of the scheme and the employer have decided effectively and have put a proposal forward as to what will happen by way of restructuring then it will happen and it is used as proof. The Minister of State's officials know all of this as well, the Department knows it as does the pensions section of the Department. Unfortunately, this is not the only time it will happen and in saying that I do not mean to be the prophet of doom. I intend to press my amendment.

Denis O'Donovan (Fianna Fail)
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Amendments Nos. 2 and 3 are related and will be discussed together by agreement.

Darragh O'Brien (Fianna Fail)
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I move amendment No. 2:

In page 16, after line 35, to insert the following:

"26. The State Airports (Shannon Group) Act 2014 is amended by inserting a new section 34A as follows:"34A.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.".".

Diarmuid Wilson (Fianna Fail)
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I second the amendment.

Darragh O'Brien (Fianna Fail)
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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?

Averil Power (Independent)
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I support this amendment. The Minister of State is aware that this issue has been debated on several occasions in the House in recent years. This is his final opportunity to do the right thing by members of the IAS pension scheme. It is absolutely horrific that people who worked for years with Aer Lingus, the Dublin Airport Authority and other aspects of the airlines at Dublin Airport have endured savage cuts to their pensions. Deferred members were enticed to leave jobs with the authority and the airline on the basis of early retirement schemes and on foot of a promise that they would receive a good defined benefit pension later on and enjoy a level of certainty regarding their entitlements. Just before they reached pension age, many of them discovered they had only a fraction of the pension they had been led to believe they were entitled to. That is a shocking and dreadful situation in which to leave people and it is incredibly unfair. As Senator Darragh O'Brien stated, it is also out of touch with international standards in this area. The OECD recommended that all of its member states should ensure that pension funds cannot be shut down unless they are 90% funded. That is the standard in other countries.

As I have done on previous occasions, I would make the distinction between single and double insolvency arrangements. If both the scheme and the company are insolvent and the company does not have the money to put into the scheme, then that is fair enough. It is unfortunate for any employee to find himself or herself in a situation where the company for which he or she works has gone bust. However, Aer Lingus is a profitable company and it has been able to walk away from honouring the entitlements which were promised over many years to its staff under the IAS scheme. That is outrageous. These are people who were forced to be part of the scheme, who made contributions from their wages for many years and who then had their pension entitlements removed at the last minute.

I have pleaded before with the Minister of State on this issue to please do the right thing. Of all the cuts that have been introduced in the past few years, those made to these people's pensions are absolutely shocking. There is no justification for those cuts. While it has been airline staff who have been hit so far, a great many pensioners will find themselves in trouble in years to come if companies see this as a precedent which allows them to walk away from their obligations. I am sure that is not the legacy the Minister of State would wish to leave behind after his time in government. As matters stand, that is how it will be. I again plead with him to do the right thing at this final stage and to accept the amendment.

David Norris (Independent)
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I strongly support the amendment. The Minister of State would, if he had the freedom, accept these amendments but I believe he is under orders from higher up not do anything about it. That is shameful and I am sorry the Labour Minister of State has to take this on the chin because we are talking about the equitable treatment of people. I have spoken many times on this issue and do not want to be guilty of too much repetition. However, it is difficult to see how anybody could object to the equitable treatment of pensioners. How can a Government stand against that? The Government has intervened disastrously in this matter. It has stuck its nose into the affairs of a limited company and intervened against the interests of the employees. Aer Lingus is a profitable company. How can a profitable company absolve itself of its responsibility towards long-term employees who generated its profits? This is terribly shocking. It brings back the worst of previous catastrophes such as the Irish Shipping situation. We never thought we would see that again. I thought the Irish Shipping people were treated disgracefully and I marched alongside them. It is a real blot on the record of this Government that it should sustain the ill-treatment of pensioners in Aer Lingus. I support both of these amendments and will be voting in favour of them. If the Minister of State was sitting on this side of the House, I know he would be one of the first through the lobbies to vote for their acceptance. I sympathise with the Minister of State but I call shame on the Government.

Kevin Humphreys (Dublin South East, Labour)
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I thank Senators Norris, Darragh O'Brien and Power for their contributions. I will not go into detail because, quite rightly, the three Senators and Senator Mooney have debated this matter at length in the House with the Tánaiste. There are unintentional consequences regarding this amendment in that it would: have an impact on company debt, investment and growth; affect an employer's ability to raise funds; give a competitive advantage to employers which have never provided a pension scheme and those which have risk-free defined contribution schemes; and prompt well-funded schemes to be wound up in order to avoid further debt. I could read out a whole page of unintentional consequences relating to increasing the funding standard which would mainly benefit companies that have never provided pension schemes.We could undermine the financial viability of companies that have provided a pension scheme. The option of raising it must be thought out very carefully.

Senators Darragh O'Brien and Power argued their point very well with the senior Minister during the earlier debates on the Bill and I do not propose to revisit the relevant issues. I will not be accepting the amendments. I am very aware of the problems that arose with regard to the Aer Lingus superannuation scheme, often referred to as the IAS scheme. As was made clear during the debate on the State Airports (Shannon Group) Bill 2014, no Minister could impose or prescribe solutions for the difficulties in the IAS scheme. These problems were always a matter for resolution by the trustees, employers, members and the Pensions Authority. In November 2014 the trustees of the IAS scheme applied to the Pensions Authority for a section 50 direction and submitted a funding proposal to address the deficit in the scheme. The trustees' proposal was later approved by the Pensions Authority and implemented on 31 December 2014. This involved the freezing of the scheme and a reduction in benefits for members. The employers' contribution was very substantial, amounting to €262 million. Given that a solution has now been adopted for this long-running problem, it would not be appropriate to accept these amendments.

Denis O'Donovan (Fianna Fail)
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Is the amendment being pressed?

Darragh O'Brien (Fianna Fail)
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Yes, but I would like to respond to the Minister of State if I may. I completely disagree with the note that departmental officials have given the Minister of State. It does not bear any resemblance to the real situation. It is important to point out that this amendment only relates to one scheme. In that context, how can the Department argue that it would have ramifications for what they call-----

Kevin Humphreys (Dublin South East, Labour)
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I referred to the general situation, as did the Senator in his first contribution.

Darragh O'Brien (Fianna Fail)
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That was related to the first amendment.

Kevin Humphreys (Dublin South East, Labour)
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The second part of my contribution was a response to the specific scheme. My general comments were in response to the Senator's general point.

Darragh O'Brien (Fianna Fail)
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I appreciate that but the amendment relates to one scheme because it was the first scheme to which this happened. The Minister of State's note also made reference to risk-free defined contribution schemes but there is no such thing. Defined contribution schemes are also at risk. The idea that defined benefit is bad and defined contribution is good is nonsense and officials in the Department need to get real about that. Defined benefit schemes are no longer in favour because they cost employers too much. It is as simple as that. According to the LCP pensions accounting briefing, as at 31 December 2014 there was only one defined benefit scheme that was close to 90% funded. In the vast majority of schemes, the funding levels have reduced at a time when investment returns have increased substantially. Why has that happened? It is because all pension funds are going to do this now.

The Minister of State said that in the case of the IAS scheme, the employer made a significant contribution to resolve the scheme's problems. However, he did not mention the fact that the employer and the active members were told not to direct any more funds into the scheme. A new scheme was set up but the liabilities of the original scheme were left with the retired and deferred members and the scheme was starved of funds. We are supposed to jump up and down on hearing that the employer made a significant contribution to the scheme but that is ridiculous. The whole process was designed to fatten up the company and remove the pension liability in advance of the sale of the State's share in Aer Lingus. That is why the Government got involved. It could not float Aer Lingus when it was still saddled with the bulk of the €760 million deficit in the IAS scheme. This process involving the Pensions Authority, the Department, the employer and the Government bordered on collusion. Indeed, I would include the Office of the President in this regard because the President signed this into law in a matter of three days. It was all done to allow the flotation statement to be released and to facilitate the sale of the State's share.

David Norris (Independent)
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Which President?

Darragh O'Brien (Fianna Fail)
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The current President.

David Norris (Independent)
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The current President. Goodness. Another Labour man.

Darragh O'Brien (Fianna Fail)
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He signed it within three days. All of this was choreographed from the beginning. I have a lot of regard for Uachtarán na hÉireann but I am just saying that it appears that everything was lined up in advance.

This amendment will not affect any other scheme. While I thank the Minister of State for responding, I again ask him what is wrong with setting a 90% funding standard which is, as Senator Power pointed out, the OECD standard. Most other western European countries abide by that standard. What is wrong with it? There is nothing wrong with it and we should apply it here. I will be pressing the amendment.

Sean Barrett (Independent)
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We need stricter rules for trustees. Some seem to want to have a bigger hole in their pension funds than others. When Senator Darragh O'Brien raised this issue first, he said, to his credit, that this was part of the sale of Aer Lingus and that the company was being fattened up. I regret that I did not take those comments more seriously at the time because the major beneficiary is now British Airways, which has acquired Aer Lingus for a song. We no longer have a national airline and British Airways now has a monopoly from Heathrow to every airport on the island of Ireland. The Minister of State made reference to unintended consequences but the slide on the pension fund started a process which has resulted in British Airways being left with a broad smile on its face, having acquired Aer Lingus for a very small price. We must pay attention to how trustees can become, as some aggrieved pensioners would argue, agents of management and do not act in the long-term interests of the members of pension schemes. Whatever the cause, the consequences are not good for this outer, offshore island. Senator Darragh O'Brien was a good prophet in terms of what lay ahead in this situation.

Diarmuid Wilson (Fianna Fail)
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Under Standing Order 62(3)(b), I request that the division be taken again other than by electronic means.

Darragh O'Brien (Fianna Fail)
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I move amendment No. 3:

In page 16, after line 35, to insert the following:

“26. The State Airports (Shannon Group) Act 2014 is amended by inserting a new section 34A as follows:“34A. The IAS Scheme shall not be allowed to close its pension scheme except where all pension scheme members are treated in an equitable manner on the winding up of that scheme.”.”.

Diarmuid Wilson (Fianna Fail)
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I second the amendment.

Paddy Burke (Fine Gael)
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I welcome Minister of State, Deputy Damien English, and Councillor Frank McDermott from Meath West to the Visitors Gallery. They and their group are very welcome.

Mary White (Fianna Fail)
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The measures combined in the Social Welfare and Pensions Bill fall far short of what is required to ensure that low-income and vulnerable households are protected from poverty and social exclusion. The small-scale measures contained in the Social Welfare and Pensions Bill are not sufficient to offset the regressive budgets introduced by the Fine Gael-Labour Party Government since it took office in 2011. The Government has been responsible for 40 deep and wide-ranging cuts, the effects of which still will be felt by households throughout the country in 2016.

Tom Shehan (Fine Gael)
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That is because Fianna Fáil robbed the pension fund.

Paddy Burke (Fine Gael)
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Senator White, without interruption please.

Mary White (Fianna Fail)
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I refer to cuts to the household benefits package and the fuel allowance, the abolition of the telephone allowance - how cruel it was not to reinstate that allowance - and the bereavement grant, as well as reductions to jobseeker's benefit, child benefit and the back to school clothing and footwear allowance.

Tom Shehan (Fine Gael)
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The Senator's party took the prize bit of it. The Senator is getting mixed up.

Mary White (Fianna Fail)
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Punitive changes to the eligibility criteria for one-parent family payments are the hallmarks of the two-tier recovery overseen by this Government.

I would like to mention one item in particular, namely, the cruel cut in the payment for young, unemployed persons from €150 to €100. This is really brutal for young people who have to pay their way living at home and pay rent to parents, family or whoever they live with. This is so cruel as they cannot have any standard of living.

Aideen Hayden (Labour)
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Who made the first cut?

Mary White (Fianna Fail)
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I know many of them in the Dún Laoghaire-Rathdown area who have not been able to get jobs for different reasons. The Minister knows as well as I do that there are people who cannot get jobs. I wish to put on the record how cruel it is to have to deal with that cold cut. Go raibh míle maith agat.

Paul Coghlan (Fine Gael)
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The Senator has criticised her own. Fair dues to her.