Fianna Fáil Press Office
Senator Darragh O’Brien
30 November 2015
Pension schemes being ripped asunder by the Government – O’Brien
Fianna Fáil Senator Darragh O’Brien has accused the Government of ‘kicking the problem of pension schemes down the road’ and called for a “better and clearer focus on pensions into the future.”
Speaking on the Second Stage of the Social Welfare and Pensions Bill in the Seanad, the Dublin Fingal General Election candidate warned that the State’s pension liability is multiples of the banking liability and called for “a better and clearer focus on pensions into the future.”
He objected to any proposals of subsuming the duties of Pensions Ombudsman into the Financial Services Ombudsman. “That is a retrograde step.”
“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
“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
Senator O’Brien said he was concerned that thousands of other workers will be affected in addition to the 15,000 active, retired and deferred pensioners in the IASS. “They were the first and there will be more unless this is changed,” he warned.
“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
“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,” he added.