Kathleen Lynch (Cork North Central, Labour)
Link to this: Individually | In context

Question 40: To ask the Minister for Social and Family Affairs the steps he is taking to address continuing concerns regarding reported large scale abuse of the construction industry pension scheme; and if he will make a statement on the matter. [4712/06]

Séamus Brennan (Dublin South, Fianna Fail)
Link to this: Individually | In context

The construction federation operatives pensions scheme operates as a registered employment agreement under the Industrial Relations Acts. There is a statutory obligation on employers to register eligible employees in the scheme and to pay the necessary contributions.

Compliance with the terms of the scheme is enforced through the Construction Industry Monitoring Agency, the Labour Court and the Department of Enterprise, Trade and Employment. The Pensions Board also has a role in relation to the scheme in so far as compliance with the various aspects of the Pensions Act are concerned. However, the main difficulties with the scheme relate to failure to register employees and-or to deduct contributions to the scheme and these issues are a matter for the Construction Industry Monitoring Agency, the Labour Court and the Department of Enterprise, Trade and Employment.

The Pensions Board has a very limited role in ensuring compliance with the scheme in question. However, because of ongoing controversy in relation to the scheme and compliance with its terms, the board facilitated a report on the scheme in conjunction with the Department of Enterprise, Trade and Employment. The report was undertaken by Mercer Human Resource Consulting and it found that 80% of the estimated 80,000 eligible employees in the industry are covered by the scheme. However, the report does highlight the fact that an estimated 70,000 operatives are classed as self-employed and are therefore not eligible to join the scheme.

Mercer has made a range of recommendations designed to improve compliance with the scheme involving the Department of Enterprise, Trade and Employment, the Department of Finance, the Revenue Commissioners and my Department. Copies of the report have been provided to the relevant Ministers.

In relation to my Department, the report recommended that consideration by given to using the PRSI system as a means of enforcing the scheme and collecting contributions. This gives rise to a number of major issues, not least of which is the extent to which the Department should be directly involved in the administration of what is a private pension scheme. Major legislative change would be required and the accounting and operational arrangements of the PRSI system would need to be adapted to meet the needs and requirements of a funded pension system. In the circumstances, my Department does not consider the use of the PRSI system is appropriate or practical. Putting the Construction Industry Monitoring Agency on a statutory footing and dealing with issues in relation to self-employment in the industry, as also proposed in the Mercer report, are in my view the ways forward. These are matters for the Minister for Enterprise, Trade and Employment and the Revenue Commissioners, respectively.

Following a meeting I had with trade unions representing construction workers, I have taken up with my colleague, the Minister for Finance, the issue of requiring compliance with the requirements under the construction federation operatives pensions scheme by companies awarded public sector contracts.