Fianna Fáil Senator Darragh O'Brien has accused the Government of once again letting down the 15,000 Dublin airport pension scheme members. He was speaking after amendments he had moved in the Seanad on the issue were voted down.
The Dublin Fingal candidate had proposed an Amendment which would put in place an appeals mechanism for pension scheme members.
“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.”
He went on to give the example of the deferred pensioners in the IAS scheme, many of whom suffered cuts of up to 60% in their provision. “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. in hearing the views of the Minister of State.
“They have been disproportionately cut yet had no recourse. 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. 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.
Senator Darragh O'Brien also proposed that the IAS scheme not be allowed to close except where the scheme has reached a minimum 90% funding standard. “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 its 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.
“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,” he warned.