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Pensions (Amendment) Bill, 2001 [ Seanad ] : Report and Final Stages.

Wednesday, 27 March 2002

Dáil Éireann Debate
Vol. 551 No. 3

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Minister for Social, Community and Family Affairs (Mr. D. Ahern): Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 1:

In page 13, line 4, to delete “section 114(4)” and substitute “section 114(1)”.

This is a technical amendment to amend an incorrect reference to the provision and format of information by the PRSA provider to the contributor, which was brought to our attention. The correct reference is being substituted.

Amendment agreed to.

Acting Chairman: Amendment Nos. 2, 11, 16, 17, 25, 34, 35, 38, 39 and 73 are related and may be discussed together, by agreement.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 2:

In page 13, to delete lines 38 to 40.

This amendment seeks the removal of the subsection dealing with the application for a PRSA product containing the phrase “have any duty to any contributor regarding the investment performance of a PRSA product.” This refers to the provider of a personal retirement savings account, in relation to the preparation that is made and the management of a product, having a duty regarding investment. Amendment No. 16 refers to “an investment profile consistent with equalling the best known market indices which measure growth in value of equities, property and other investment products.” The other amendments to be discussed here, and mostly in my [647] name, refer to the investment performance of a PRSA product.

This is a fundamental issue because from the outset we should be putting down a marker for providers of these products. It is not a question, as was said on Committee Stage and as the Bill states, of a provider simply mismanaging the details of the administration of a product, but the placing of a prudential duty on providers towards contributors in relation to the performance of investments by reference to the highest possible standards. We are all familiar with recent investment history, particularly over the past two years. We saw the downturn in the United States in late 2000, which accelerated after the inauguration of President Bush, and there was a devastating setback in many IT and high-tech stocks and equities.

Acting Chairman: I remind the Deputy that we are on Report Stage.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan Yes, but there are seven amendments in this grouping.

Certain fund managers saw it as part of their duty to make changes to a portfolio early in the developments to which I have just referred, particularly the downturn sparked by the problems in the United States and which accelerated greatly after the devastating events of 11 September. Many fund managers saw it as their duty to try to change funds distribution on that basis and this is an area in which pensioners and contributors to PRSAs will have tremendous interest as the years pass. They will want their savings to be managed in accordance with the highest possible standards in markets. The other amendments make the same point and one of them also refers to growth in national income.

The Minister did not accept any of these amendments on Committee Stage but it is a reasonable requirement that we have reference to the highest standards of performance, whether it is the ISEQ or the NASDAQ, and the best performing investment managers in terms of savings products.

I do not normally agree with Senator Shane Ross. His economic views and mine are at opposite ends of the spectrum but he made some telling points about the management of funds and the way people have been bitterly let down. We have all had constituents coming to us complaining about endowment products in particular on which they were guaranteed €11,000 but which are at a miserable €6,000 or €7,000, with little time remaining. I am trying to guard against that and I ask the Minister to take a strong stance on behalf of workers and pensioners and include a reference, at least in one key part of the Bill, to measuring the performance of funds according to the highest standards in the market.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes I have tabled amendment No. 39. I come at this issue in a slightly different [648] way to Deputy Broughan. One of the functions of the board set out in the new section 117 should include some reference to performance. The board is the competent authority to examine in an independent and objective way the performance of PRSA providers and other companies which provide similar pension cover because they represent all the players in the industry and those who obtain this cover. Notwithstanding any difficulties that may arise in terms of legal challenges to the board's ruling, all I ask in my amendment is to give the board, as an additional function, power to publish an annual report on the investment performance of the different providers in such a way as to allow some kind of comparative study of the performance.

As I said on Second Stage and in our discussions last week in committee, companies frequently compete against each other on the basis of their own figures. The first time I was asked to buy a particular product I was told by the provider that this particular company had achieved an excellent performance over the past five years, and that it was at the top of the pile. Some authority or body should examine the performance over a period of time and come to a conclusion as to who did and did not do well because of the nature of the investment portfolio. If the Pensions Board gave the public that information rather than the companies, it would greatly enhance the level of accountability in this area.

The Minister raised an interesting point on Committee Stage. A case could arise where another company could challenge the findings of the report of the Pensions Board. I do not believe that would happen if the facts of the matter were set out in terms of the performance of each of the providers. That would be a useful way to proceed in terms of giving information to the public.

Minister for Social, Community and Family Affairs (Mr. D. Ahern): Information on Dermot Ahern Zoom on Dermot Ahern We had a good discussion on this issue on Committee Stage and for the reasons I outlined then, I cannot accept the amendments. The same thread runs through the various amendments. One of the reasons we have included strict disclosure requirements is to put an onus on the PRSA provider to give the contributor regular updates on his or her pension investment. They came mainly through the statement of reasonable projection and also statements on the actual value of the investment. We are trying to put the duty of care on the PRSA provider and the strong advice to me is that is the correct procedure. We want to make clear that it would not be appropriate for either the Pensions Board or the Revenue Commissioners to give a guarantee in relation to the PRSA investment. That is not possible.

I agreed on Committee Stage that this area merits further examination and it is on the agenda of the Pensions Board to examine the issue of protecting the contributor in relation to investments generally, not just in PRSAs. This issue is currently being examined at EU level in the con[649] text of a draft directive on the activities of institutions for occupational or retirement provisions. Any future policy we might implement here would be very much influenced by developments and experience at EU level, and we will closely examine that particular issue. Future arrangements which we have to examine include the responsibility of the trustees in the case of occupational pension schemes, and of PRSA providers in the context of PRSAs. It is their responsibility and we should not undermine that in any way.

It is the strong view of the Department that we must have more transparency in this area through, for instance, the introduction of investment principles relating to the level of risk, portfolio diversification and charging structures. We will ensure this is formalised through investment mandates or contracts between the trustees and the investment managers.

At the core of what we are doing is putting the duty of care on the PRSA provider, not on the Pensions Board or the Revenue Commissioners because, in effect, we would be underwriting a guarantee. The Deputy may say he is not proposing that we go that far but the strong advice given to us is that would be the net result of what he is proposing which would, in effect, give some succour to people in terms of their investment. That is not the way it operates. If we were to do that, we would defeat the purpose of this legislation and not bring more people into this market. For those reasons I cannot accept the amendments.

Acting Chairman: I remind Members that their second contribution may not exceed two minutes.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan The Minister made an interesting reference to developments in Europe. My colleague, Deputy De Rossa, MEP, has made important contributions in the European Parliament on the evolution of the pensions directive and in respect of important decisions that will be taken this summer. I hope the incoming Government will have some input into that process.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern Deputy De Rossa has plenty of pensions.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I accept the Minister's difficulty—

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern He must have about five at this stage.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan —in accepting all the amendments related to the introduction of a new system, PRSAs, and the putting in place of a pensions ombudsman, which are at the core of this Bill. It would be reasonable, however, for the Minister to accept amendment No. 38 in my name and amendment No. 39 in the name of Deputy Hayes. All we propose in those amendments is that the board would be obliged to publish ongoing reviews. Such reviews would enable a [650] young person setting out in life to compare a PRSA product from a service provider with a recent review of such products by the Pensions Board to ascertain who are the best providers of such products, who have the highest standards, who gets the best results, which fund managers perform the best and which providers' products match the best performing market indices such as the FTSE or ISEQ. This is a reasonable demand sought by myself and Deputy Hayes. I put the case for the provision of such a review by the Pensions Board.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes The Minister made a point about guarantees, but no guarantee is sought in respect of my amendment No. 39 or Deputy Broughan's amendment No. 38. It would be a natural follow on for the board, which grants the licences, in consultation with the Revenue which gives an element of guarantee in respect of the people who end up with these licences, to ensure that some work could be published which would set out the performances of the different companies. Deputy Broughan is right.

Where does a person in his or her late 20s or early 30s, who decides to put aside part of his or her salary for a rainy day, go? That is what we are trying to provide for in the Bill, a new culture of savings among a cohort of people in the labour force who currently do not make any provision for savings. At present they can only go to the different providers. They cannot go to an independent body which would set out the performances of the different providers.

I do not think there will be a major difference in performance from one provider to the next. Much of the regulations we are putting into the Bill will ensure a level playing pitch for the different providers. I do not think there will be great variety in the profitability of any of these products. We are not looking for guarantees but for a statement of performance. The body to do that, acting as an independent voice outside the industry and representing the different elements that make up pension policy, is the Pensions Board. I put the point again to the Minister, that the person in his or her late 20s or early 30s to whom I referred needs to know such information from an independent source. From reading the various legislative initiatives in this area, that source should be the Pensions Board.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern The Deputy effectively is asking that the Pensions Board publish a league table of the performance of the PRSAs. It could not do that because it could potentially involve itself in protracted discussions, even litigation, with the PRSA providers in what, in effect, is an open market. PRSA providers may well have legitimate reasons for one provider's product being higher than another's. Putting an onus on the board to publish an annual league table every year would do a disservice to some PRSA providers who might be at the end of such a league table.

[651]The Deputies may say that all they are trying to do is to protect individuals, but they are protected on an individual basis by way of the statement of reasonable value which, under the legislation, must be given on a yearly basis and also by way of the statement of the current actual value of the investment. I relented on Committee Stage to exhortations from the far side of the House that such a statement must be delivered to a contributor every six months, but a contributor can ask for and must be given such a statement at any time, apart from the bi-annual requirement.

I accept the issues raised by the Deputies are valid. They are being considered at policy level in the Pensions Board and, hopefully, with some experience in this area we might be able to bring something forward in the future. This is primarily PRSA legislation and bringing such a measure forward at this time in terms of the enactment of the PRSA vehicle is not considered the correct way to proceed.

Amendment put and declared lost.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 3:

In page 15, between line 31 and 32, to insert the following:

“(7) The Board shall prepare, amend from time to time as it considers appropriate and publish widely a Charter of Pension Consumers Rights to include all PRSA products.”.

The amendment deals with the procedures governing the board's role in the granting of PRSA products. On foot of his discussions and the lengthy gestation of this Bill, the Minister has included a code of conduct in respect of producing, marketing and selling of PRSA products by providers. That will ensure a basic standard will be in place for the PRSA product. The Minister rejects the idea that the board could produce, even in a general way, a performance related table to show the performance of different products. I seek something less in this amendment, a widely published charter of pension consumers rights to include all PRSA products.

I am critical of the fact that on this, possibly the second last day of the 28th Dáil—

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern No.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan —we are discussing this vital legislation.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes The last day.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern No.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes The Minister has information on that.

Acting Chairman: Deputy Broughan should speak to the amendment.

[652]Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan We are discussing this legislation on the ultimate or penultimate day of this Dáil. It has taken a long time for it to reach this stage. I commend the staff in the Department of Social, Community and Family Affairs and the Minister who has put a great deal of work into this area, particularly over the past year and a half. We were able to get the information on the PRSAs published separately, which we were able to distribute.

Legislation in this area is complex. Having saved to buy a house, pension provision is probably the next most important area for which a family must provide. A clearly set out charter of rights for contributors and people who take out personal retirement savings accounts should be in place which, despite the complexity of this area and the legislation, would enable people to have at least a reasonable idea of what to expect in terms of such provision and how to proceed. I ask the Minister again to include a basic charter of rights such as this. We are familiar in local Government and in many areas of business life with having charters of basic rights for patients or consumers or directed at local authority services. In this area it is important that we have something similar. I commend this amendment to the House.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern The Pensions Board has a very important role generally, and especially in this legislation, in relation to awareness and the dissemination of information. Its remit includes the production of information booklets and after the passing of this Bill it will begin work on a booklet on PRSAs which will be distributed widely. It also undertakes many seminars and conferences about pensions. We are not convinced in the Department that a charter of consumer pension rights would be appropriate in relation to the code of conduct which is being introduced. This code of conduct will be drawn up by the Pensions Board for the PRSA providers and will set down the basic issues involved.

I have added, since the legislation was introduced, provision for a consumer representative on the board. His or her role would be to look after the rights of consumers. Before the Bill was introduced there was provision for a consumer representative on the board but after Second Stage I introduced a similar amendment in order to provide for representation by a pensioner. We believe that the balance is correct and that a charter of rights is not required.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I withdraw the amendment but if the Pensions Board examines our discussions today it might decide to follow through on the idea on its own initiative. Pensions are important and the area is a very detailed one. It is an opportunity that needs to be taken as early as possible in life, even in student days and when people are very young workers. People should have the opportunity to understand the various options. As we saw during the debate on this issue, the [653] vast majority of people have no idea about, for example, the difference between deferred benefit and deferred contribution. This is why many people make no provisions for themselves. They tend to shy away from what they see as the complexity of predicting the future. I urge the Pensions Board to pursue the idea of a charter. I withdraw the amendment.

Amendment, by leave, withdrawn.

Acting Chairman: Amendment No. 4, in the name of Deputy Brian Hayes, arises from Committee Stage proceedings and is related to No. 5. Amendments Nos. 4 and 5 may be discussed together by agreement.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes I move amendment No. 4:

In page 15, between lines 31 and 32, to insert the following:

“(7) The board may consider the previous investment performance of the PRSA applicant before deciding upon the application to be approved or refused.”.

Amendments Nos. 4 and 5 arise from a discussion on Committee Stage and relate to the code entered into, before the licence is granted, between the PRSA provider and the board. The aim of the first amendment is to clarify that the board may consider the previous investment performance of the PRSA applicant before deciding upon its application. The second amendment provides for the board to consider the compliance record of the PRSA provider. These are two important issues. The Minister may tell me that before the granting of the approval of the PRSA product these two issues will be taken into consideration in terms of the code of conduct set out in section 94 but I have not read it in the Bill as clearly and as explicitly as it is set out in amendments Nos. 4 and 5.

We do not want companies or individuals with poor records on investment performance or compliance with company law to become providers. It is important to state explicitly that these are two grounds on which the Pensions Board, as the regulator in this area, can refuse to grant a licence. The Minister may tell me that these criteria already exist but they are not as explicit as they are in my amendments. It would be useful if they were established in the legislation.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern The board will be overseeing the product and not regulating the provider. The provider will be authorised to provide services by the existing regulatory authority, such as the Central Bank or the Department of Enterprise, Trade and Employment. It is the responsibility of these authorities to supervise the entities they authorise when it comes to business conduct generally. In relation to product approval, a code of conduct will be drawn up by the Pensions Board for PRSA providers relating to the approval of the product. In this the product perspective addresses [654] the issues raised by the Deputy. When a provider is being approved previous performance must be taken into consideration and compliance must also be considered as the process continues. Two different bodies oversee the provider and the product. Their remits are explained well in the Bill and I do not think that the Deputy's proposal could improve matters any further.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes While the board, in effect, licences the product, no distinction can really be made between the product and the provider. The Minister says it would be up to the Central Bank and the Department of Enterprise, Trade and Employment to ensure the provider is a reputable body and I am sure they would do this. However, an efficient transfer of information between all sources is required to ensure these products are of the highest standard. It is necessary to state this explicitly in respect of the approval of products and the code of conduct. This would not be required if we ensured the information flow as set out in the legislation occurred, and I hope this will happen, but explicit references such as the ones in these amendments will be required.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I cannot say much more about this. If there is a problem with the compliance of the provider the Central Bank or the Department of Enterprise, Trade and Employment will deal with it, but the board must take into account any problem with the product. As the Deputy says, the transfer of information between the relevant bodies is vital and it is provided for in the Bill. We cannot envisage any problem but as the legislation is enacted and implemented any difficulties could be investigated by the board.

Amendment put and declared lost.

Amendment No. 5 not moved.

Acting Chairman: Recommittal is required in respect of amendment No. 6 as it does not arise from committee proceedings. Amendments Nos. 6, 10 and 24 are related and may be taken together by agreement. Is that agreed? Agreed.

Bill recommitted in respect of amendment No. 6.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 6:

In page 16, lines 25 to 28, to delete all words from and including “subsection” in line 25, down to and including “itself” in line 28 and substitute “subsections (2) and (3)”.

These amendments are technical and seek to clarify the position regarding the custodial arrangements for PRSA providers in relation to PRSA contributions. Different arrangements apply depending on whether the PRSA provider is a life assurance company, a company capable of providing its own custodial arrangements or one that is not.

[655]Amendment agreed to.

Bill reported with amendment.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 7:

In page 16, line 47, to delete “section 96(1)” and substitute “subsection (1)”.

This is a drafting amendment.

Amendment agreed to.

Acting Chairman: Recommittal is required in respect of amendments Nos. 8 and 9.

Bill recommitted in respect of amendments Nos. 8 to 10, inclusive.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 8:

In page 16, line 50, after “91(1)” to insert “, and section 107(2)”.

Section 96(2) refers to the definition of a contribution to PRSA when the PRSA provider is a life assurance company and where therefore there is no requirement to have separate custodial arrangements for the PRSA contributions received.

We have received comments that the intent of the section is not clear and hope these amendments address the points raised.

Amendment agreed to.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 9:

In page 16, line 53, after “and” to insert “that section and”.

Amendment agreed to.

Acting Chairman: Amendment No. 10 has already been discussed with amendment No. 6.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 10:

In page 17, to delete lines 1 to 7 and substitute the following:

“(3) If a PRSA provider satisfies the Board that it is capable of providing the services referred to in paragraph (e) of subsection (1) in respect of its PRSA products and that it intends to do so, that paragraph (e) shall not apply to it.”.

Amendment agreed to.

Bill reported with amendments.

Amendment No. 11 not moved.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 12:

In page 21, to delete lines 30 to 33 and substitute the following:

“(3) A PRSA contract shall indicate in general terms that, under and in accordance [656] with Part XI of the Pensions Act, 1990, it is the right of the contributor to refer a complaint or dispute under the contract to the Pensions Ombudsman.”.

This amendment relates to the right of the contributor to refer a dispute to the pensions ombudsman. The amendment provides that a PRSA contract must indicate that a contributor to the contract has a right to refer a complaint or dispute to the pensions ombudsman. The section, as drafted, is incorrect as it states that either party to the PRSA contract could refer a complaint or dispute to the pensions ombudsman which is not the position as is clear from the provisions of the section providing for the ombudsman.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes It deletes the double reference.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern A person has the right to make a complaint and that must be explicit in the contract documents.

Amendment agreed to.

Acting Chairman: Amendments Nos. 13 and 46 are consequential on amendment No. 15. Amendments Nos. 13, 15 and 46 may be taken together by agreement. Is that agreed? Agreed.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 13:

In page 22, line 31, to delete “102.–” and substitute “102.–(1)”.

These amendments which relate to sections 102 and 126 are technical as they reposition the section requiring the report on pensions coverage introduced on Committee Stage. There is no change of intent.

We discussed amendment No. 14 on Committee Stage and Deputy Broughan said it related to the provision of information to PRSA contributors—

Acting Chairman: We have not moved on to amendment No. 14.

Amendment agreed to.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 14:

In page 22, line 38, after “provider” to insert “and subject to the condition that the PRSA provider shall provide, to the contributor, such functions regarding the PRSA product as he or she requests”.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern We discussed the issue of the provision of information to PRSA contributions by providers. I agree with the sentiment of the proposal but consider it is well covered in the Bill in relation to the various disclosures of statements of reasonable projection and the details of [657] the value of the PRSA contributions. We do not feel it necessary that this amendment be made.

Amendment, by leave, withdrawn.

Acting Chairman: Amendment No. 15 has already been discussed with amendment No. 13.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 15:

In page 22, between lines 38 and 39, to insert the following:

“(2) The Minister shall cause—

(a) a report in relation to the extent of the application of occupational and other pensions (other than pensions under the Social Welfare Acts), in respect of such matters as the Minister considers to be relevant, to the population to be prepared by such persons as the Minister may determine not later than 3 years after the commencement of section 3 of the Pensions (Amendment) Act, 2002, in respect of the insertion of section 121 into this Act and a copy of that report to be furnished to the Minister and

(b) a copy of that report to be laid before each House of the Oireachtas within 6 months after its preparation.”.

Amendment agreed to.

Acting Chairman: Amendment No. 16 has already been discussed with amendment No. 2.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 16:

In page 23, between lines 16 and 17, to insert the following:

“(b) subject to the provision referred to in paragraph (c), a requirement that such a strategy adopt an investment profile consistent with equalling the best known market indices which measure growth in value of equities, property and other investment products;”.

Amendment put and declared lost.

Amendment No. 17 not moved.

Acting Chairman: Amendments Nos. 18 and 19 are related and may be taken together by agreement. Is that agreed? Agreed.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 18:

In page 25, line 13, to delete “1” and substitute “0.5”.

These amendments relate to charges. I am seeking to have the percentage of contributions changed from 5% to 3%. I am looking for this [658] information in the amended Bill, some of the pages are different.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern It is page 25, lines 13 to 22.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I do not appear to have the amended copy.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes The amended copy is green.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I am seeking to have the level of charges on contributions reduced to 3%. I know the Minister made a cogent argument on providing more flexibility. It is, however, fair to say that we have had a great deal of controversy down through the years about the types of charges levelled on insurance products. Many people feel the practice of front-loading charges, in particular, has often removed some of the value which the product would have reached if that had not occurred.

The Minister said, by reference to different performances in the past, that it was felt a figure of 5% would be more encouraging to providers. Nonetheless, it appears to give a good deal of scope in that regard. It could be keener. Likewise, I argued on Committee Stage for a keener limit on charges in relation to 1% of assets. One needs to look at the history of the insurance industry and the fact that people have felt that the front-loading of charges on different products has been antithetical to the kind of results which contributors wanted to achieve when they invested in projects. I urge the Minister to reconsider these amendments.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern We looked quite closely at this issue when drafting the Bill. Most of the industry felt the charges incorporated in the legislation were too low. The view was expressed that providers would not bother going into the market because charges were so low. We had to strike a balance in this regard. I stress that the 1% and 5% levels are maximum levels. If, as time moves on, all the charges are bunched at the higher limit, we will have to look at that issue again.

The maximum charge on the stakeholder pension in the UK is 1% of the assets only but the Deputy must take into account that there is a greater volume of pensions in that market and a number of companies have said they may not survive. I would err on the side of caution in terms of adjusting the charges. While all of us would like to see low charges, a balance must be struck. The charges provided for in the legislation are reasonably low to protect the consumer. I do not accept the amendment but the charges will be reviewed.

Amendment, by leave, withdrawn.

Amendment No. 19 not moved.

Acting Chairman: Amendment No. 21 is an [659] alternative to amendment No. 20 and both may be discussed together by agreement.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 20:

In page 25, lines 43 and 44, to delete “timely advance notification” and substitute “prior notification of at least 2 months”.

The amendment arises from a discussion on Committee Stage as to whether “timely” is more appropriate than two months. We accept the objective of the proposal put forward by Deputy Hayes. The word “timely” would put more onus on people and two months would give too much leeway in terms of the notification provision.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes The Minister has gone some way to respond to the issue I raised on Committee Stage and I accept his amendment.

Amendment agreed to.

Amendment No. 21 not moved.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 22:

In page 26, to delete lines 18 and 19 and substitute the following:

“(3) An employer shall pay, at his own expense, contributions into the employee's PRSA which at least equal the employee's contributions.”.

This is a key amendment in the area of PRSA accounts. The Minister referred to this issue at length on Second and Committee Stages. The issue of occupational pensions was examined in the famous NPPI report a few years ago and it was felt that there was a major problem in Ireland because the bulk of private sector workers did not have such pensions. The opportunity arose through PRSAs to remedy this and increase the numbers of people who would hold second tier pensions.

I have urged the Minister to go one step further. An employee has the right to consider taking out such a pension but the employer should also make mandatory contributions. It should be a requirement in legislation that both employers and employees should contribute to a fund. That is a reasonable demand. Management contracts refer to pension emoluments and compensation and very often they comprise a significant portion of an employee's future income. We have an opportunity to require employers to give real support to PRSAs by asking them to contribute as well.

Such a provision would be underpinned by section 787J of the Principal Act because the contributions would be tax exempt. Employers would be able to provide significant future remuneration to their employees by making a mandatory contribution together with the employee to the PRSA. I urge the Minister, on behalf of workers, particularly those who are young and hope to [660] provide for their futures through occupational pensions, to give the PRSA a further kick start and accept the amendment. The legislation states employers “may” contribute to PRSAs but I want it to state that they “shall” contribute.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes This is one of the key issues in respect of pensions policy as we go forward. A consensus was reached in the 1998 report on pensions between employers and employees. Union representatives and business interests agreed that a mandatory regime would not be implemented when the PRSA product was introduced. On reflection, that was probably the wrong position to take. We can draw on the experience of the UK stakeholder pensions, which have been a gigantic flop, and this issue must be dealt with sooner rather than later.

On Second Stage the Minister responded to a proposal I made regarding a review mechanism. He has inserted a new section that will give him the power to review this issue if the PRSAs are not taken up, as anticipated. This issue can be addressed only in the context of the next partnership agreement and, until it is addressed, the level of cover that is expected will not be achieved. We must move to a position where employee contributions are looked upon in the same way as contributions by many large companies to their employees, otherwise employers will wriggle out of their responsibilities and obligations.

The Minister needs to outline his thinking behind the review mechanism. He will be aware that the next set of figures to be published regarding pension cover will show that less than 50% of the workforce has pension cover. While it is welcome that more people are working in the economy, the number of pensions has reduced since the last survey of pension cover. This is a key issue but whether it will be broached in the context of this legislation is another matter. It can be addressed in the long-term only when employers make contributions commensurate to those made by employees.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern The principle underlying the legislation is to implement the recommendations of the national pension policy initiative which, as Deputy Hayes said, resulted from a consensus reached among the social partners in this area. The trade unions, on behalf of workers, did not insist on a mandatory regime. They agreed to the voluntary arrangements.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan Sometimes the Labour Party is more radical than the trade unions.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern The Deputy is making a radical proposal which would be foisted on employers without discussion or negotiation and would not be in keeping with the spirit of social partnership. If social partnership is to work, there must be an acceptance on all sides that if an agreement is made, it must be adhered to and that is the posi[661] tion. In the section concerning pensions, the PPF stated that a survey would be carried out into the coverage in the first 15 months of the programme to monitor progress towards the target. There is an acknowledgement in the PPF that the situation was to be reviewed. The proposal to which I agreed, as prompted by Deputy Hayes, in the amendment we made on Committee Stage to implement the review will take that into account. The experience of the mandatory approach in Australia is that schemes are designed to provide the bare minimum and that is not the way to proceed. There has been a downside to the mandatory approach in Australia. I have asked the Pensions Board to look at this and now that we have put the review mechanism into the legislation, if the voluntary approach does not work, we will come back to the drawing board. We must give the position agreed with the social partners a chance.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I accept the Minister's logic in the context of the new product but it is an issue that should be discussed at the negotiations for the next national partnership agreement. The Minister for Finance tried to encourage people to save through the SSIAs. There were other macro economic aims, for instance, to cool the economy, but it was a strategic decision. The Labour Party regretted that he did not put in place a scheme as Combat Poverty wanted, dedicated to those on the lowest incomes, including social welfare recipients and pensioners.

In the context of the future increases in salary, set aside for pensions as part of a reward for work done is a clear and important way to go. We can only do that if the employers are involved and they are granted a major tax concession by this Bill where it amends the revenue sections. The Labour Party will revisit this idea in future.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I agree with the comments on the forthcoming negotiations for a new social partnership agreement. We asked the CSO to include questions on pension coverage in its latest survey. That will provide the benchmark by which we can judge what happens in future. That will feed into the discussions that take place. I take the Deputy's points but we are honour bound to implement the agreement made under the national pension policy initiative, an agreement that was unanimous on going the voluntary route. Employers, employees and the interests represented on the board agreed we should go the voluntary route. We will try it, but if it does not work we will go back to the drawing board.

Amendment, by leave, withdrawn.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 23:

In page 26, line 50, to delete “€50” and substitute “€25”.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern This relates to the level of minimum PRSA payment allowed. On Committee [662] Stage we established the figure of €50 following general consultation. The aim was to strike a balance between what is reasonable from the point of view of the consumer and the cost from the provider's perspective. This relates only to cash transactions and we believe there will be very few such transactions. Most payments will be made electronically. A payment of €10 is allowed under the Bill if it is done electronically. That will be the main way to make the payments.

Amendment, by leave, withdrawn.

Bill recommitted in respect of amendment No. 24.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 24:

In page 27, line 4, to delete “section 96(3)” and substitute “subsection (2) or (3) of section 96”.

Amendment agreed to.

Bill reported with amendment.

Amendment No. 25 not moved.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 26:

In page 29, line 10, to delete “binding on” and substitute “enforceable against”.

This is a drafting point in relation to the cooling off period for a PRSA contract.

Amendment agreed to.

Acting Chairman (Mrs. B. Moynihan-Cronin): Information on Breeda Moynihan-Cronin Zoom on Breeda Moynihan-Cronin Amendments Nos. 27 and 28 are related and will be taken together.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 27:

In page 29, line 11, to delete “15” and substitute “28”.

This refers to the cooling off period. The Minister said on Committee Stage that the general period in relation to other products is 15 days but I am asking it to be extended to 28 days. Pensions and pension products are complex and it is understandable that a person would need a reasonable period of time to read the small print and consult advisers.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern The contract standard for pensions and insurance is 15 days. The amendment seeks to increase that period of 15 days from the date when the PRSA provider gives the person a statement of reasonable projection at the start of the contract to 28 days. I oppose the amendment.

Amendment, by leave, withdrawn.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 28:

In page 29, line 14, to delete “section 112(1)(c)” and substitute “section 112(2)(a)”.

[663] This is a technical amendment to correct a section reference.

Amendment agreed to.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 29:

In page 29, line 35, to delete “annually” and substitute “at six-monthly intervals”.

This seeks to increase the accountability to contributors and to require PRSA providers to produce a statement of reasonable projection at six monthly intervals rather than annually. The PRSA provider has other obligations under this amended section but, with reference to the first amendments I tabled, it is important in relation to investment and insurance products to have a continuing report on their performance. Often with existing products, the annual report about how funds are performing does not give sufficiently detailed information that contributors might require. I urge the Minister to introduce a time frame of six months.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern The PRSA provider is obliged to give the printed form to the contributor on an annual basis. Providing it on a biannual basis would place extra costs and an additional burden on the providers. We are trying to strike a balance in everything we do. I emphasise that, irrespective of the compulsory annual provision of the certificate or statement in printed form, the provider is obliged to produce the statement at any time and at no charge provided the contributor gives seven days' notice.

On the question of disclosure, a statement of the value of the contributor's position must be provided every six months and a report on the investment funds will be given every six months. This provision was introduced in response to an Opposition proposal. There is a significant and reasonable disclosure requirement in the legislation.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan The Internet will be used extensively in terms of contributors and would-be pensioners availing of information on these products. Has the Minister included a specific provision on Internet publication, the degree to which information on these products must be updated and other matters which may need to be addressed or are these matters covered generally by the terms of the Bill?

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern As the legislation provides that the information must be in printed form, it does not apply to the Internet. This is the correct approach. While it is obviously reasonable for the contributor to be happy to have a statement provided via the Internet, there is nothing specific in the legislation in that respect. This option could leave one open to the accusation that people are [664] not being informed when, in fact, they are not checking the Internet as often as they should.

Amendment, by leave, withdrawn.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 30:

In page 30, line 21, after “transfer” to insert “(that is to say, the member of the scheme)”.

This section refers to the disclosure of information that is required where a member of an occupational pension scheme is transferring his or her pension benefits to a PRSA. The amendment makes clear that the person to whom the disclosure should be made is the member of the pension scheme, as distinct from, for example, the employer or trustees. The amendment is purely to clarify matters.

Amendment agreed to.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 31:

In page 30, to delete lines 36 to 47.

The Minister made a couple of reasonable points on this matter on Committee Stage.

On a separate issue, he stated that the current census will enumerate the take-up of pensions among the population, which brings me to a matter which arose in recent days with regard to the census takers. Some of them have complained bitterly that they are not receiving unemployment benefit for the days on which they are not working which means that those working three days are not receiving benefit to which they are entitled through their stamps for the other days. Will the Minister comment on the matter?

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern We have strayed a long way from the amendment.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan The Minister mentioned the census.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I referred to the quarterly survey carried out by the Central Statistics Office, not the census. We hope to have the results of this survey which is being carried out as we speak some time in May. I have not received any complaints in respect of census takers not receiving unemployment benefit. Obviously, however, recipients of the benefit must be genuinely available for and seeking work. Perhaps the deciding officers, who are independent of me, are adopting the attitude that they are not available for work.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes I hope they are on PRSI.

Amendment, by leave, withdrawn.

Acting Chairman: Amendment No. 32 is in the name of the Minister. Amendment No. 33 is an [665] alternative and the amendments may be discussed together by agreement.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 32:

In page 31, line 33, to delete “annually” and substitute “, at intervals of not greater than 6 months' duration,”.

I undertook on Committee Stage to consider the Deputy's proposal further with a view to introducing an amendment on Report Stage. The amendment addresses the sentiments expressed by the Deputy on Committee Stage.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I thank the Minister for introducing it.

Amendment agreed to.

Amendments Nos. 33 to 35, inclusive, not moved.

Acting Chairman: Amendment No. 36 is in the name of the Minister. Amendment No. 37 is related and the amendments may be discussed together by agreement.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 36:

In page 32, between lines 36 and 37, to insert the following:

“(4) A Statement of Reasonable Projection shall include a statement of the value, at the date of the preparation of the statement, of the old age (contributory) pension, within the meaning of Chapter 12 of Part II of the Social Welfare (Consolidation) Act, 1993, as a percentage of earnings of a typical employee calculated in such manner as may be specified in regulations.”.

I undertook on Committee Stage to consider introducing an amendment, as prompted by Deputy Broughan, to include a reference to the social welfare old age (contributory) pension in the statement of reasonable projection. The text inserted in the Bill reads:

(4) A Statement of Reasonable Projection shall include a statement of the value, at the date of the preparation of the statement, of the old age (contributory) pension, within the meaning of Chapter 12 of Part II of the Social Welfare (Consolidation) Act, 1993, as a percentage of earnings of a typical employee calculated in such manner as may be specified in regulations.

This is a reasonable amendment which gives effect to my undertaking and addresses the sentiments expressed by Deputy Broughan on Committee Stage.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I welcome the Minister's acceptance of the core of the Labour Party amendment, which was that PRSI contributors [666] should be informed of the potential development of the State pension. I wanted to include existing occupational pensions in the provision. However, the kind of information I seek in that context is not widely available. The issue at stake is the basic point that we need the fullest possible information before we can choose a particular pension product. This applies, in particular, to people who have reached the most expensive point in their lives, for example, young couples with major commitments who are trying to purchase a house and establish a family. It is incumbent on us to ensure that such persons are given the fullest information.

I have commended the Minister in the past for the increases in contributory and non-contributory pensions, which have been one of the most important aspects of his administration. I hope the incoming Government will be determined to develop and uphold the kinds of increases for our pensioners he has introduced. The Labour Party is committed to doing so in Government. It is important that a young person considering the purchase of his or her first PRSA product is aware of the likely increases in first tier pensions. I thank the Minister for accepting a large part of our amendment.

Amendment agreed to.

Amendments Nos. 37 to 39, inclusive, not moved.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 40:

In page 34, to delete lines 38 to 46 and substitute the following:

“(3) Regulations may prescribe that in—

(a)preparing a certificate under this section, or

(b)signing a certificate required under section 94(1)(b),

a PRSA actuary shall comply with any applicable professional guidance issued by the Society of Actuaries in Ireland for this purpose and specified in the regulations or with any applicable guidance issued by any other person (including the Minister) and specified in the regulations.”.

This refers to the functions of a PRSA actuary. The amendment provides that in preparing various certificates that are required for approval of the PRSA, for example the charging structures and complying with the legislation, the actuary shall comply with the guidelines of the Society of Actuaries in Ireland and that this guidance will be underpinned in regulations. The amendment relates to this underpinning.

[667]

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes Presumably these regulations will come from the Minister for Finance?

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern No, from us.

Amendment agreed to.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes I move amendment No. 41:

In page 37, between lines 6 and 7, to insert the following:

“(8)(a)Contributions shall be treated in the same manner for the purpose of relief from income tax, where the payment of the contribution is made by the contributor or is made on his behalf to the PRSA provider.

(b)Contributions shall be treated in the same manner for the purpose of relief from pay-related social insurance and health levy, where the payment of the contribution is made by the contributor or is made on his behalf to the PRSA provider.

(c)Such relief from pay-related social insurance and health levy as applies to PRSA contributions shall apply to contributions in respect of existing personal pensions.”.

This is an important amendment in respect of the treatment of tax relief on various contributions. We had a brief discussion of this on Committee Stage and this amendment seeks to provide a level playing field in respect of the contributions made by employees. As the Minister knows, PRSI relief currently is not given to employees who choose their own pension. There is a distinction between contribution payments made directly by the contributor and contributions made by the employer through their salary deduction, so there is a fundamental tax distinction.

The Minister is aware of the underlying commitment to the introduction of PRSAs to introduce a flexible model of pensions. He has committed himself to that and I welcome the major thrust of this legislation but we must ensure there are no distinctions in taxation policy in respect of the treatment of various pensions. It seems unfair that this distinction should still exist between those who make their own pension provisions and contributions in their own way and those who have their pension provisions paid for through their employers. As the Minister knows, that distinction exists because of the PRSI differential. He may tell us that he has no power in respect of the Minister for Finance and that he is simply stitching in all of these sections from the Department of Finance but he is the Minister bringing the legislation to the House. It is essential that we try to iron out some of the existing anomalies in [668] our taxation law regarding pensions and I ask him to consider this amendment. It attempts to create a level playing field for all concerned and would be in the interests of contributors, employees and those who want to make contributions in their own way as opposed to those who do so through their employers.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern It would be no harm to read my note as it will clarify the position from all points of view.

The amendment seeks to have contributions made on behalf of the employee treated in the same manner as contributions made by the employee for tax, PRSI or health levy purposes. It also seeks to have all pension products put on an equal footing regarding PRSI and health levy charges.

I must reject the amendment on the basis that the existing provisions both in this Bill, as passed on Committee Stage, and the Social Welfare Bill, 2002, already achieve the same objective. Under the tax provisions, as in section 4 of this Bill, PRSA contributions by an employer are treated as a benefit in kind in the hands of the employee. Such contributions are treated for tax purposes as having been made by the employee so that effectively the benefit in kind charge will arise only where the aggregate contributions made in a year exceed the relevant limits. Relief from PRSI and health levies will also be given in respect of such contributions. The Social Welfare Bill, 2002, provides for a relief from PRSI and health levies in respect of RAC and PRSA contributions where the contributor is an employee or a director. In the case of PRSA contributions from an employer, the contributions are treated as having been made by the employee or director for that purpose also.

The overall effect of these measures is that subject to limits, relief from PRSI and health levies will apply in respect of all pension contributions by an employee, whether to an occupational pension scheme, a PRSA or RAC. Accordingly, I must reject the amendment on the basis that these matters are already in the Bill as drafted and the Social Welfare Act, which has hopefully passed at this stage.

In relation to the general issue of taxation, it is a fact that the Minister for Finance has the primary responsibility regarding tax provisions but the tax provisions in relation to PRSAs are very generous, as a result of the agreement of the Minister for Finance in this respect.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes Is the Minister saying the PRSA contribution from individual employees will not have the same PRSI relief as contributions from employers? Is the Minister clear about this – that there is no fundamental tax distinction between those who want to pay for their own contributions outside the occupational scheme as [669] opposed to those paying through their employers?

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern There is no difference, no.

Amendment, by leave, withdrawn.

Bill recommitted in respect of amendment No. 42.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 42:

In page 38, line 2, after “in” to insert “this or”.

This section relates to the buy-out bonds and is purely technical, adding a reference to the Pension Act, 1990, to make the intent clearer.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes The buy-out bonds?

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern Yes.

Amendment agreed to.

Bill reported with amendment.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 43:

In page 38, lines 42 and 43, to delete “or a defined contribution scheme”.

Since this is a pensions matter, I use this amendment for a discussion about the trend away from defined benefit schemes and the implications that has for workers in defined contributions, where employees have to carry the bulk of the risk, effectively. I know it is an international trend in the United States, Britain and elsewhere but it has the potential to reduce the guaranteed rights of employees. As I said on Second Stage, it was one of the reasons for reservations among some trade unionists about the public sector area. I know it is something for another day and it should be addressed by the incoming Government if, from the point of view of employees we are to encourage the retention of defined benefit schemes.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern This issue is becoming more prevalent, as there has been a fairly major shift from defined benefit to defined contribution schemes, but it has nothing to do with this Bill. The Deputy has admitted that he put down this amendment simply to inspire a discussion which took place on Committee Stage. If I agreed to this amendment it would make the situation more restrictive in effect, which I obviously could not do. I understand the perspective from which the Deputy is coming, however.

Amendment, by leave, withdrawn.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 44:

[670]In page 39, line 9, to delete “2” and substitute “3”.

Amendment agreed to.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 45:

In page 39, line 9, to delete “2” and substitute “6”.

I welcome the Minister's previous amendment and I will withdraw this one.

Amendment, by leave, withdrawn.

Bill recommitted in respect of amendment No. 46.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 46:

In page 39, to delete lines 12 to 28.

Amendment agreed to.

Bill reported with amendment.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes I move amendment No. 47:

In page 41, between lines 14 and 15, to insert the following:

“(ii) by the substitution in section 772(3A) and (3B) of ‘employee' for ‘proprietary director';”.

This amendment relates to fund-based retirement options. Ordinary employees cannot avail of the option to select an improved retirement fund instead of a fixed pension on retirement, but this amendment would allow maximum flexibility to employees. A provision giving the fund-based retirement option to company directors was introduced by the Minister for Finance in the Finance Act, 1999, but my reading of the legislation indicates that such a measure is not in place for others. In this amendment, I propose to give the option open to company directors to all employees, so they can determine their requirements without being directed by the State, as is currently the case. This Bill provides that they will not be entitled to such an option.

The Minister is aware of the 15 year rule which is part of this Bill and on which we had a discussion on Committee Stage. My party does not think the rule will be to the ultimate benefit of employees and those who want to move out of the arrangements they are in at present. Given the general principles of maximum flexibility and personal choice on which the Bill is based, we should ensure that employees can do what they like with their money and their savings schemes. It is not the responsibility of the State to tell people they cannot use their money for certain purposes. Amendment No. 47 attempts to give a legislative form to such flexibility.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I support the amendment. It is fair to say the changes made by the Minister for Finance in 1999 to the approved retirement fund [671] gave extra freedom to employees. He said at the time that he was not opposed to the principle of annuities and I think I heard him repeat that recently. Those who have put money away for pension plans deserve the maximum flexibility at the end of their period of contribution and should be trusted to manage their own money. My amendment No. 48 is based on the same general idea as the amendment under discussion. I would like workers to be given the freedom to manage the fruits of their PRSAs and, therefore, I support Deputy Hayes' amendment.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern This amendment is not related to the provision or introduction of PRSAs and Deputy Brian Hayes is trying to make changes which would be better suited to the Finance Act. I explained on Committee Stage why I cannot accept this proposal and other considerations have to be taken into account. Deputies Broughan and Brian Hayes will accept there is no better man than Deputy McCreevy for allowing people to use their own money at their own discretion—

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan Particularly if one has plenty of money.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern —but it is not a simple matter of extending the freedom to everyone.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes The top dogs are given the choice.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I oppose this amendment as there are additional considerations which have to be taken into account.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes I cannot allow the comments in the Minister's response to pass. Top earners are given the choice to do what they want with their money, at considerable cost to the State in terms of taxation, while those working in normal jobs are locked into the existing financial arrangements. The Minister said there is “no better man” than Deputy McCreevy, but it is not just that the rights that apply to company directors cannot be transferred to everyone else. The Minister may tell the House that this is nothing to do with him as it is a matter for the Finance Act, but he is the sponsoring Minister who is bringing this Bill through the House. This section of the Bill deals with PRSAs and we have an obligation to highlight some of the inconsistencies in pensions policy by proposing amendments on Committee and Report Stages. It is unfair to restrict the options for ordinary employees, given that liberating amendments were brought in during the debate on the Finance Bill, 1999, offering unbelievable pension options to the self-employed and company directors. It is a mistake not to offer these choices to ordinary employees.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern This is not a simple matter and the Deputy should not suggest that it is. These [672] are issues for the Finance Act, primarily, where the changes made by the Minister for Finance can be seen by all. One cannot isolate this issue in a Bill which is introducing PRSAs. We heard the Deputies' arguments on Committee Stage and I repeat that I cannot accede to them.

Amendment put and declared lost.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 48:

In page 56, between lines 16 and 17, to insert the following:

“(2) Any employee may opt to contribute to an approved retirement fund in preference to a PRSA fund and may enjoy the same tax relief as self-employed contributors to an approved retirement fund.”.

This is the final amendment proposed to the section of the Bill dealing with PRSAs. The Minister is moving towards equalising the assets of approved retirement funds and PRSAs in section 787H of the tax code by allowing transfers to beneficiaries. The points made during the discussion on the previous amendment still apply. The Minister has said the Minister for Finance trusts people with the management of their money, but he does not trust about 80% of us. He trusts the social group, representing 10% or 15% of the population, which accompanies him to Cheltenham each year, but not the rest of us. This small amendment seeks to change this to some extent.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I do not go to Cheltenham and I do not mix in such salubrious surroundings. As I have said to Deputies before, I am very much—

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan The Minister is in a minority within his party.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I will reserve my comments.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I thought the Minister had a share in a horse.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I rejected this amendment on Committee Stage on the grounds that pension contributions cannot be made to an approved retirement fund. I accept the Deputy's remarks in relation to some of the changes we have made in this area which have allowed people to have more options. What he is trying to do, in effect, is to use it as an alternative to contributing to a PRSA. The discussion on Committee Stage was more detailed. However, I am of the view that it would undermine the issue of PRSAs.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan We would all be better off being self-employed or sub-contractors because of the tax code.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern The Deputy wants it every way.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I believe in having the same [673] advantages for every citizen. We are a socialist party and believe in equality.

Amendment put and declared lost.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes I move amendment No. 49:

In page 63, to delete lines 1 to 4 and substitute the following:

“(e) in part 42, by the substitution, in subparagraph (ii) of paragraph (g) (inserted by the Finance Act, 2001), of section 986(1) of ‘Chapter 1 or Chapter 2 or Chapter 2A of Part 30', and”.

The Minister gave me an assurance earlier on amendment No. 41 that it is not the case that those who pay into personal pensions by salary cannot avail of the net pay arrangement. There is no necessity for this amendment if he is telling me, which he did in respect of the earlier amendment, that there is no net pay distinction in amendment No. 41. If that is the case I withdraw the amendment.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I reject the amendment on the basis that the relief for PRSI and health levies, which are given through the net pay arrangements, is already available under the Social Welfare Act, 2002, as amended recently.

Amendment, by leave, withdrawn.

Acting Chairman: Amendments Nos. 50 and 51 are related and may be discussed together by agreement. Is that agreed? Agreed.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes I move amendment No. 50:

In page 64, between lines 9 and 10, to insert the following:

“‘Oireachtas Committee' means the Joint Oireachtas Committee on Family, Community and Social Affairs;”.

The intention behind amendments Nos. 50 and 51 was to give some power to the Oireachtas committee in respect of the appointment of an ombudsman. I accept that ultimately the appointment should be made by the Minister but the all-party committee of the House should have some input. I propose that the committee vet the various candidates seeking the position of ombudsman. On Committee Stage, the Minister did not accept these amendments. However, in parliamentary terms, we are moving to a situation where many of these high profile appointments should be made by committees. There should be some vetting by the committee system of all those appointed. It would also involve the House in a more direct way with the legislation. Given that the House is setting up this new office of ombudsman, it has a responsibility to monitor the work of the ombudsman. The direct control of the Minister and the Minister for Finance on all the ombudsmen who have been appointed is too [674] much. The committee could have a role in this matter.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I cannot agree to these amendments, the effect of which would be to turn on its head appointments to positions where the imprimatur would have to come from the Oireachtas. While that might be laudable, it is the duty of Government to make these appointments and the Minister to whom the ombudsman is not answerable would have the overriding power. The Deputy referred to the examination of the ombudsman's work by an Oireachtas committee, and that is provided for. It is possible that the ombudsman could be summoned to the Oireachtas committee. I do not see these amendments as necessary. In effect the Deputy is trying to give the say-so as to appointments to an Oireachtas committee but that would not be acceptable.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes All I said was that the committee may make a recommendation to the Minister. It is not the same thing.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern There is nothing to stop a committee from making a recommendation.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes Put it in the Bill then.

Amendment, by leave, withdrawn.

Amendment No. 51 not moved.

Acting Chairman: Amendment No. 52 is in the names of the Minister and Deputy Broughan. Amendment No. 53 is related. Is it agreed to discuss amendments Nos. 52 and 53 together? Agreed.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 52:

In page 65, to delete lines 11 to 13.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I thank the Minister as I think he is accepting that there should not be an age restriction of 61 years for appointment to ombudsman. In regard to vacation of the office I also seek the deletion of lines 41 to 43, which deals with the upper restriction in relation to leaving the office. I made the point on Second Stage that the ageing directive is expected from the European Union in 2006. Under that directive it will be illegal to have specific ages for certain jobs. We have to get away from ageism. Recently the chief executive of the Equality Authority did some good work on cases brought before him of workers who applied for certain positions or sought to enter certain premises and so on. Where any ageist criteria was used he was able to show it was illegal. This is an area about which we have to be careful. Obviously there cannot be discrimination against older people.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I undertook on Committee Stage to look at this issue. The advice from the [675] Attorney General's office is that the age of 61 might contravene the Employment Equality Act, 1998 and we have decided to delete the requirement. We believe the upper age limit should remain. The advice is that the upper age limit does not infringe the Act.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes The upper age limit being 67.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern Yes, 67. It depends on one's age at the time. Some of us are close enough to 61.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan The Taoiseach said he will no longer be in politics in his sixties but he might—

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes He could be happy at a number of things.

Amendment agreed to.

Amendment No. 53 not moved.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 54:

In page 67, between lines 39 and 40, to insert the following:

“(b) a complaint made to him by or on behalf of an actual or potential beneficiary of an occupational pension scheme or PRSA who alleges that he has sustained financial loss occasioned by reference to the best known market indices which measure growth in value of equities, other investment products, gross domestic product and property;”.

This amendment seeks to add to the functions of the pensions ombudsman a requirement that he consider a complaint not just by reference to the maladministration of a PRSA product but also by reference to the performance of the product in relation to the general value of equity increases and other investment products, gross domestic product and property. These criteria would also be areas to which the ombudsman might refer. At the start of the debate today there was a series of amendments in which I sought to include reference to the best possible indicators of market performance. I ask that the ombudsman would have that type of accountability. Clearly, the Minister disagrees.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern If this amendment is trying to address maladministration it is already caught by section 131(2)(a) on page 67 of the Bill. If this is not the case and the amendment refers to an investment that did not perform as expected or give the returns of another product then it would not be appropriate for the pensions ombudsman. Therefore, I oppose the amendment.

Amendment, by leave, withdrawn.

Acting Chairman: Amendment No. 55 is conse[676] quential on amendment No. 56. Amendments Nos. 57 and 58 are alternatives to amendment No. 56. Amendments Nos. 57 and 58 are also consequential on amendment No. 59, and amendment No. 60 is an alternative to amendment No. 59. Amendments Nos. 55 to 60, inclusive, may be discussed together, by agreement. Is that agreed? Agreed.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes I move amendment No. 55:

In page 68, line 9, to delete “Ombudsman—” and substitute the following:

“Ombudsman. It shall be a matter for the Pensions Ombudsman to determine what complaints or references under this section shall be investigated and a determination made thereupon.”.

We had a long discussion on Committee Stage on this issue. Deputy Broughan and I are agreed that we want the pensions ombudsman to investigate any complaints which come before him or her, without time limits.

The Office of the pensions ombudsman is the first real legislative vehicle by which ordinary pensioners can put complaints where they feel they have a grievance. In objecting to this amendment, the Minister argued that he does not want to have the office flooded with complaints. I do not think that will happen. Amendment No. 55 and others give sufficient discretion to allow the ombudsman to determine what he wants to investigate. The Minister made some effort in the Seanad to move from three years to six years the length of time in which an investigation must take place. He has also tabled an amendment regarding the time when an act first came to the attention of a complainant. I believe this is confusing. A time limit is not needed and the ombudsman must be allowed the maximum flexibility. We do not wish to tie his hands in any way and we want him to use his discretion in investigations.

The pensions ombudsman will be required to determine questions on the basis of fact. He will have to present a case and others will have to ensure they follow his recommendations to the letter. Many pensioners have questions to ask regarding pension schemes and many schemes must come under the ombudsman's microscope. It would be a disgrace to allow the Bill to pass while excluding some people from the kind of high profile investigation promised under this legislation.

Even at this late stage I implore the Minister to take the view of the Opposition in respect of this issue. He has gone some of the way. We are now asking him to go the last mile to ensure the best possible regime to investigate these matters.

I am dissatisfied that the Minister for Finance is given such a strong hand in this legislation. The ombudsman cannot appoint an additional member of staff to his office or seek additional revenues without the approval of the Minister for [677] Finance. This is not the way ombudsman legislation has been put in place by other Legislatures. We must remove the centralising focus of the Department of Finance from this legislation.

I ask the Minister to consider this important set of amendments, even at this late stage.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan This is indeed the most significant series of amendments to the Bill and this is the last opportunity this Oireachtas will have to regulate pensions. All Deputies on all sides of the House have large files of references from employees who feel their pension schemes have been managed badly. Surpluses have not been distributed properly and schemes have been seriously underfunded by management. I mentioned some celebrated cases during the debate on Second Stage. I represented workers in the Irish Press Group, for example, who felt there was serious underfunding of the No. 2 fund, under which their pensions were being taken care of. I have received representations from a wide range of companies, such as the Ford Motor Company and the Guinness Group, in relation to the management of surpluses. On Second Stage I also mentioned the Tara Mines retired workers and the concerns of workers with disabilities.

The Minister said the three year and six year limits will be flexible and that the ombudsman might be able to take a long look-back as a result. Nevertheless, the legal basis must be clear and I strongly commend the amendments in the names of Deputy Hayes and myself, which seek to give the ombudsman the widest possible reference of a look-back into the past. The Minister said the average time for employees to enjoy a pension is nine years. On that basis a look-back of ten years would be fairer.

This issue is fundamental. All 86,000 occupational pensions will not come to the ombudsman's desk but we are all aware of a significant number about which complaints have been made in the past and on which the ombudsman's hands should not be tied.

It is important that the ramifications of this Bill ensure that a person such as Robert Maxwell, who allegedly placed some of his workers' pension funds in accounts and businesses which had nothing to do with their welfare, should not emerge in the future. We can do this by giving the ombudsman a free hand in this regard.

I urge the Minister to accept these amendments.

Mr. Browne: Information on John Browne Zoom on John Browne (Carlow-Kilkenny): I spoke on this issue during the debate on Second Stage and I support the amendments. It is strange that we appoint an ombudsman to deal with complaints while stipulating that only a certain number of complaints can be dealt with. Many pension funds have been set up longer than six years and these regulations could be very unfair to members of these funds, many of whom are advanced in years. Why are we making a distinction between two groups of people who have been wronged, [678] one group being lucky enough to have been wronged within the six year limit and the other not?

I cannot see how the ombudsman's office will be flooded with complaints because he will, invariably, be dealing with principles which will affect a number of workers. I became aware of the difficulties which can beset pension funds when the sugar company workers in Carlow found that while there was a considerable amount of money in their pension fund their State retirement pensions were docked. The ombudsman should be asked to give his views on the matter. If a wrong has been done to pensioners it should be rectified. Why should a huge pension fund not be used to pay pensioners, the people who built up the fund originally? Many sugar company pensioners, some of whom are quite old, feel they have been wronged and deprived of money to which they are entitled.

I appeal to the Minister to let everyone have a fair crack of the whip. If the ombudsman is there to hear complaints, let him hear genuine complaints and, as Deputy Broughan said, weed out those that are frivolous and indefensible. We must avoid a “them and us” situation, where some pensioners can make complaints to the ombudsman and some can not.

Mr. M. Higgins: Information on Michael D. Higgins Zoom on Michael D. Higgins A Leas-Cheann Comhairle, you will recall how often over a number of years on the Order of Business I asked the Taoiseach and the Minister concerned about the CIE pensioners. I am speaking on amendments Nos. 55 to 60 regarding the time limit on the ombudsman's remit. CIE pensioners, for example, would be affected by this provision. Before CIE broke up into Iarnród Éireann and so on, it had approximately 15 pension schemes. The fund of non-salaried staff – put simply, all those in uniform – was in huge surplus. It was represented to some that they should take a small lump sum and some are now on £40 per week after 40 years service. The surplus from their fund was put into the amalgamated fund. They could not understand why the governing rules – exactly as Deputy Browne said – stopped them having access to the surplus even though a huge number of them were approaching pension age. This can be considered and the argument that it would open the floodgates does not apply. A case taken by a non-salaried member of CIE would solve the issue of all those who were in uniform and who are locked into a consequence of the amalgamation of their schemes in a particular way.

People working for agencies and who have an agency relationship with the State point to anomalies, let us say, between non-established and established civil servants. I am thinking of those who work in health and safety, for example. If an anomaly is identified, it is the anomaly that would be for adjudication by the ombudsperson. In a reply to a written question today on the midland pensioners to whom I referred, the Minister for Enterprise, Trade and Employment said if com[679] panies are no longer semi-State and are independent, she has no function in relation to their pensions. The difference is that these people had pension schemes for which the State had a responsibility. When the State shed its responsibility for many of the companies and, effectively, put them into a commercial relationship, these pensioners lost very significant rights.

There are two other powerful reasons not to limit the remit of the ombudsman. We had this argument in relation to people who had been abused and child abuse when I was education spokesperson. We argued that this restriction should be removed because of the time it took people to discover that they had been wronged. In one case, a person who had an alcohol problem signed up to an arrangement for his early retirement. Many years later his widow, who was entitled to half of what he had settled for, had to go back and make a case to a particular body and try to suggest that her husband was not in a position to know all the facts when, effectively, he signed something that not only signed away his rights in a diminished sense but signed away his wife's rights which she did not discover until some years later. I could think of many more such cases.

If the right of access to the pensions ombudsperson is a right rather than a commercial relationship, the time limit should not apply. We are not talking about the law of contract but about people's right to income. It could have been expressed that normally six years would apply but that in exceptional circumstances, the ombudsperson could take on these cases which would not be normal. By restricting it to a specified number of years, as amended in the Seanad, there is, effectively, an exclusion order on all those who are still suffering. If this is to be welcome legislation on pensions, the appropriate emphasis should be one based on rights rather than on a limitation in time. I support the amendments in the Deputy's name.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I remind the Deputies that the functions of the pensions ombudsman primarily are in relation to issues of maladministration and disputes about fact or law on pensions. We had a long discussion on this. In the Bill as originally drafted there was a three year set limit. As a result of representations and the discussion we had in the Seanad, I agreed to consider the matter again and I went further than the three years, to six years. The Deputies acknowledged that. As I said earlier, given the way in which the legislation is drafted, it is not an absolute six years and I again stress this. We checked this with the Attorney General's office and the advice is that there is discretion. The ombudsman will have discretion in relation to the definition of when an act takes place. It states six years from the date of the act giving rise to the complaint. There is scope for the ombudsman to determine when that act kicks in which gives rise to the time limit. [680] There is flexibility of interpretation in the way it is drafted to allow the pensions ombudsman to determine when the clock starts to tick. That is something similar to changes made to the Civil Liability Act.

It is all very well for Deputies to say the floodgates would not open. The reality is, if my memory serves me correctly, there are 85,000 existing schemes covering 650,000 people. The idea is to put in place a pensions ombudsman for the PRSA regime and the occupational pensions. The strong advice is that we have to strike a balance. Even if a tiny proportion of the people in those 85,000 schemes came forward with a complaint, there would be a deluge of work which the ombudsman's office would not be able to address while at the same time dealing with schemes which are beginning or which have been in place for the past six years. We have to draw the line somewhere.

While it may be easy for Deputies to say we should extend it ad infinitum, the reality is that we have to have time limits. There are time limits in all legislation to provide some reality. If one was to leave it open-ended, schemes which date back decades could arise. A lot of the principal people involved in those schemes would not perhaps be alive today. Some of the Deputies and people outside may believe the six years is sacrosanct but it is not because there is flexibility in the interpretation of the act. The legislation states “six years from the date of the act giving rise to the complaint”.

If it was open-ended, I believe, and it is the strong advice of my Department, there would be a deluge of complaints retrospectively and that, in effect, the ombudsman might constantly end up in the High Court dealing with challenges to schemes on which the views of people would have long been ventilated. People would have had the opportunity over the years to challenge in court the documents on the framing of the pension schemes but would have chosen not to do so.

I have gone a long way and have increased the period from three to six years. That is the standard time limit for civil and most other legal actions that can be taken in this State. There is flexibility and I suggest that it be left to the pensions ombudsman to determine when time started ticking. If legislation was to be more prescriptive than that, we would be doing the opposite to what we wish to do. It would withdraw some of the pensions ombudsman's flexibility. I ask Deputies to be realistic. They should listen to the advice, based on the experience and advice of my officials, I have outlined to both Houses which is reasonable in the circumstances. The issue of flexibility, as advised by the Attorney General, is built in and we believe this is the best way forward.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes I do not accept the Minister's argument. He referred to 85,000 schemes which could potentially come before the ombudsman's office. The reality is that only a small number of [681] them are in dispute. If one of those cases were to come before the ombudsman and were to refer to the issues of surpluses or anything else, it would set a precedent for other cases. Pensioners would then find out if they were right or wrong. One case study could take away the grievance of others. That is the benefit of ensuring that we create the maximum opportunity for the ombudsman to look back. Many of the schemes which are in dispute relate to Irish companies. Some of them are large companies which are still trading and making large amounts of money. They have not given sufficient protection to their pensioners and that is shameful.

The Minister makes the point about the floodgates opening. My amendment would give absolute discretion to the ombudsman. It reads:

It shall be a matter for the Pensions Ombudsman to determine what complaints or references under this section shall be investigated and a determination made thereupon.

It is not our job to give our view of discretion in the Bill. It is our job to give absolute discretion to the ombudsman so that his hands are not tied in investigating these matters. The acceptance of my amendment No. 55 and Deputy Broughan's amendment would give that discretion solely to the ombudsman. It is for us to give the ombudsman the power to give maximum effect to his office. If the ombudsman needs another ten staff to sort out this problem, then so be it. Nobody is suggesting that these historical problems will emerge in the future, but they may.

The fingerprints of the Department of Finance are all over this legislation. There is a view within that Department that the ombudsman will be given the least rather than that maximum number of offices. Let us not tie the hands of the ombudsman. I ask the Minister to rethink his position even at this late stage.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan The Minister opposed the type of performance criteria I attempted to introduce for new products and PRSAs. In this case we are discussing difficulties that have arisen over the years in occupational pension schemes because of the restrictions of existing rules, maladministration or serious underfunding. The pensioners to whom Deputy Michael D. Higgins referred certainly have grievances. They have been waiting for the day when this Act becomes law and the Minister sets out the regulations governing the establishment of the office of the ombudsman. In the past, one could only make a case to the Pensions Board. Investigations often occurred but little or nothing transpired because the necessary resources were not in place. The Pensions Board did not have much power. The Minister has the chance to give absolute discretion to the ombudsman regarding problems with occupational pension schemes in the past. I urge him to support the amendments which allow for that discretion.

[682]Mr. Browne: Information on John Browne Zoom on John Browne  (Carlow-Kilkenny): I accept that this Bill and the establishment of an ombudsman is a very good idea. The Minister said there would be flexibility. Does the six years start in October-November 2002?

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern There is a flexibility as to when the six years starts.

Mr. Browne: Information on John Browne Zoom on John Browne (Carlow-Kilkenny): But it is still six years. There could be many pension schemes going back six years that might have minor defects and some maladministration. There could be a major scheme that goes back eight years with such problems. It would be shocking if we were to introduce legislation which would prevent a major case just two years outside the limit being dealt with by the ombudsman. How could that be regarded as equitable?

We heard a lot about floodgates in the recent referendum and it was a figment of people's imagination. We should not be thinking about floodgates opening. Surely not all pension schemes are wrong. I cannot accept the suggestion that floodgates will open. Even with that risk, which I do not accept exists, it is more important that we make sure that those with serious complaints about how their pension fund was administered can get satisfaction.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I have outlined the strong advice I received. It did not come from the Department of Finance. Deputy Hayes is naive if he thinks legislation can pass through the Oireachtas without the imprimatur of the Department of Finance. It cannot. He was also wrong when he said one case could be a test case. That cannot happen. Trustees might not accept the ombudsman's determination in one case affecting all—

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes They might.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern If one person were to take a case, it would be open to the trustees to say that any determination related to that individual case. There is no open-ended time limits in legislation passed by the Oireachtas.

Mr. Browne: Information on John Browne Zoom on John Browne (Carlow-Kilkenny): That generally relates to payments.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern The Statute of Limitations was introduced for very good reason. People who have a decades' old grievance might want something examined when circumstances changed. If there was a stateable case, why did those people, who had problems with the pension fund, not take legal action as they were entitled to?

Mr. Browne: Information on John Browne Zoom on John Browne (Carlow-Kilkenny): How can pensioners afford to do that?

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern Some of them are very powerful. I am making the point that if they had a stateable case, they would have. Our proposal is better [683] than people having to go to court, as all Deputies would accept. There must be a time limit as experience around the world suggests that a pension ombudsman must be protected from being engulfed by inquiries from yesteryear. Six years is reasonable and it is open to interpretation by the ombudsman. He will be entitled to determine what the Act is and then the clock starts ticking.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes Let him decide.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I have gone as far as I can.

Mr. Browne: Information on John Browne Zoom on John Browne (Carlow-Kilkenny): Let him go as far as he can.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I have been accommodating in going from three years to six and there is flexibility.

Mr. M. Higgins: Information on Michael D. Higgins Zoom on Michael D. Higgins In relation to the interpretation of discretion, can the ombudsman take the statement by this Minister, that the Minister, who had responsibility for transport, has no function in pension funds, historic or otherwise, as the defining act for the purposes of the legislation?

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern Does the Deputy mean my statement in the Dáil?

[684]Mr. M. Higgins: Information on Michael D. Higgins Zoom on Michael D. Higgins The point arises in relation to my question about the CIE pensioners. They were in a relationship to the State under CIE. The company was then changed and the nature of the 12 or 15 pension funds changed also. The Minister responsible for transport has no function in relation to those pensioners. The Taoiseach gave an indication to me that he would consider the case sympathetically and asked the Minister for Public Enterprise to write to me, but she says I can do nothing now. Is the Minister's suggestion that she has no function in the matter, an act definable within the terms of the Act and so would allow the ombudsman to look at their case?

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern It does not depend on my statement in the Dáil. It depends on the interpretation of the legislation and that is up to the courts. If the pensions ombudsman decides that he can take up a case, then he would have to prove that he is entitled to do so under the legislation. Other people could challenge his interpretation. What I say here does not determine what he is entitled to do. It is entirely up to the ombudsman to decide if he has discretion, although there is flexibility in the legislation.

Question put: “That the words proposed to be deleted stand.”

Ahern, Dermot.
Ahern, Michael.
Ahern, Noel.
Aylward, Liam.
Blaney, Harry.
Brady, Johnny.
Brady, Martin.
Brennan, Séamus.
Briscoe, Ben.
Browne, John (Wexford).
Callely, Ivor.
Carey, Pat.
Collins, Michael.
Cooper-Flynn, Beverley.
Coughlan, Mary.
Cowen, Brian.
Cullen, Martin.
Daly, Brendan.
Davern, Noel.
de Valera, Síle.
Dempsey, Noel.
Dennehy, John.
Ellis, John.
Fahey, Frank.
Fleming, Seán.
Flood, Chris.
Fox, Mildred.
Gildea, Thomas.
Hanafin, Mary.
Harney, Mary.
Haughey, Seán.
Healy-Rae, Jackie.
Jacob, Joe.
Keaveney, Cecilia.
Kelleher, Billy.
Killeen, Tony.
Kirk, Séamus.
Kitt, Michael P.
Kitt, Tom.
Lenihan, Brian.
McCreevy, Charlie.
McGuinness, John J.
Martin, Micheál.
Moffatt, Thomas.
Moloney, John.
Moynihan, Donal.
Moynihan, Michael.
Ó Cuív, Éamon.
O'Dea, Willie.
O'Donoghue, John.
O'Flynn, Noel.
O'Hanlon, Rory.
O'Malley, Desmond.
O'Rourke, Mary.
Power, Seán.
Roche, Dick.
Ryan, Eoin.
Smith, Michael.
Wade, Eddie.
Wallace, Dan.
Walsh, Joe.
Wright, G. V.

Níl

Barrett, Seán.
Bradford, Paul.
Broughan, Thomas P.
Browne, John (Carlow-Kilkenny).
Carey, Donal.
Clune, Deirdre.
Connaughton, Paul.Coveney, Simon.[685]

Níl–continued

Crawford, Seymour.
Currie, Austin.
D'Arcy, Michael.
Deasy, Austin.
Dukes, Alan.
Durkan, Bernard.
Enright, Thomas.
Farrelly, John.
Finucane, Michael.
Flanagan, Charles.
Gilmore, Éamon.
Hayes, Brian.
Hayes, Tom.
Healy, Seamus.
Higgins, Jim.
Higgins, Joe.
Higgins, Michael.
Howlin, Brendan.
Kenny, Enda.
McCormack, Pádraic.
[686]McDowell, Derek.
McGinley, Dinny.
McGrath, Paul.
McManus, Liz.
Mitchell, Jim.
Mitchell, Olivia.
Moynihan-Cronin, Breeda.
Naughten, Denis.
Neville, Dan.
Ó Caoláin, Caoimhghín.
O'Shea, Brian.
O'Sullivan, Jan.
Penrose, William.
Perry, John.
Quinn, Ruairí.
Ring, Michael.
Ryan, Seán.
Sargent, Trevor.
Sheehan, Patrick.
Stagg, Emmet.
Timmins, Billy.

Tellers: Tá, Deputies S. Brennan and Power; Níl, Deputies Bradford and Stagg.

Question declared carried.

Amendment No. 56 not moved.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 57:

In page 68, line 10, to delete “subject to subsection (5),”.

Amendment agreed to.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 58:

In page 68, line 24, to delete “subject to subsection (5),”.

Amendment agreed to.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 59:

In page 68, to delete lines 31 to 38 and substitute the following:

“(5) References in this section to a complaint or dispute shall be construed as including references to a complaint or dispute the act giving rise to which was done prior to the establishment day if, but only if, that act was done within the period of 6 years prior to the passing of the Pensions (Amendment) Act, 2002.”.

I move the following amendment to amendment No. 59:

In page 68, to delete lines 31 to 38 and substitute the following:

“(5) References in this section to a complaint or dispute shall be construed as including references to a complaint or dispute the act giving rise to which was done prior to the establishment day if, but only if, that act was done within the period of 6 years prior to the passing of the Pensions (Amendment) Act, 2002 or between that passing and the establishment day, as the case may be.”.

If one were to read the amendment as drafted it would exclude cases between the passing of the Bill and the establishment day. Obviously that is not the intent.

Amendment to amendment put and declared carried.

Amendment, as amended, put and declared carried.

Amendment No. 60 not moved.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 61:

In page 71, line 20, to delete “dispute” and substitute “reference”.

This is a drafting amendment which proposes replacing the word “dispute” with the word “reference” in keeping with the drafting of that subsection, which refers to staying court orders in relation to the references to the pensions ombudsman.

Amendment agreed to.

Acting Chairman (Mr. McCormack): Information on Pádraic McCormack Zoom on Pádraic McCormack Amendment No. 69 is related to amendment No. 62 and they may be taken together by agreement.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 62:

In page 73, between lines 8 and 9, to insert the following:

“(11) The Pensions Ombudsman may, of his own volition, refer an investigation file to the National Bureau of Fraud Investigation of An Garda Síochána and to the Director of Public Prosecutions.”.

I welcome the extent to which the Minister has moved forward in amendment No. 69, which provides that the pensions ombudsman may disclose the conduct of an investigation to the Garda [687] Síochána, which may relate to the commission of an offence.

In amendment No. 62 I propose that the pensions ombudsman should be able to refer a file to the National Bureau of Fraud Investigation of An Garda Síochána and to the DPP. I thank the Minister for moving some way towards that.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I undertook to consider this issue and brought forward an amendment. We were advised by the Attorney General that it was not necessary to refer to the DPP, that once there is reference to the Garda Síochána that would suffice.

Amendment, by leave, withdrawn.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 63:

In page 73, line 38, after “the” to insert “Pensions”.

This amendment is to make it clear that the reference in the subsection is to the pensions ombudsman.

Amendment agreed to.

Acting Chairman: Amendment No. 65 is related to amendment No. 64 and they may be taken together by agreement.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 64:

In page 74, to delete lines 1 to 11.

We talked about the pensions ombudsman's powers in the investigation of schemes and the time limit that applies, when dealing with amendment No. 55 which was put to a vote. In this amendment I seek to give the pensions ombudsman some control over the rules of the schemes and behaviour of trustees. We argued about this on Committee Stage. This is a significant amendment.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I oppose these amendments because the ombudsman's determinations are binding, subject to an appeal to the High Court. That is a considerable and powerful position to be in. Amendment No. 65 seeks to allow the ombudsman to award redress by reference to investment performance. As discussed earlier, it is an approach to which I cannot agree.

Amendment, by leave, withdrawn.

Amendment Nos. 65 to 68, inclusive, not moved.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I move amendment No. 69:

In page 77, between lines 48 and 49, to insert the following:

“(3) Notwithstanding subsection (1), the Pensions Ombudsman or a member of his staff may disclose to a member of the Garda [688] Síochána information which, in the opinion of the Pensions Ombudsman or the member of his staff, may relate to the commission of an offence (whether an offence under this Act or not).”.

Amendment agreed to.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 70:

In page 102, between lines 41 and 42, to insert the following:

“(c) to ensure that, where an ongoing surplus exists in an occupational pension scheme, an employer shall continue to make his normal contributions and shall not take a so-called contribution holiday;”.

We discussed this point on Committee Stage. A consistent complaint made to Deputies relates to surpluses whereby employers seek to vary their contributions. I ask the Minister again to consider the amendment.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern We debated this earlier and on Committee Stage. I accept that there are issues in relation to surpluses and the dealing of surpluses. I tried to address this matter in section 39 which deals with the indexation of pensions and payment. There is considerable debate in the UK on the treatment of surpluses and deficits in pension schemes from an accounting point of view. This may lead to the further demise of the defined benefit schemes here. I oppose the amendment because it is not relevant to this legislation, but it is an issue that is occurring.

Amendment, by leave, withdrawn.

Amendments Nos. 71 to 73, inclusive, not moved.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I move amendment No. 74:

In page 110, between lines 20 and 21, to insert the following:

“(2) The Minister shall take such steps as are necessary to ensure that, of the members of the Board determined by the First Schedule to the Principal Act, as amended by this section, at least two shall represent consumer interests, one shall represent a national pensioner's representative body and one shall represent the insurance banking industry.”.

The Minister went some way towards accepting the general thrust of the discussion we had on membership of the board. We were anxious on Second and Committee Stages to ensure that a member of a pensioners' representative body and consumer interests would be represented on the board. I was convinced by the arguments put in relation to the insurance broking industry. The reference to “insurance banking industry” in the amendment is incorrect and should read “insurance broking industry”. We heard argu[689] ment on that on Second and Committee Stages. I urge the Minister to consider this proposal.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern When I came to deal with this Bill, we included a consumer representative. As the Bill proceeded through both Houses of the Oireachtas, I came of the view that a pensions board specifically should have a representative of pensioners on it. I have an open mind about a representative from a national organisation. That is probably the intention, but I do not want to be prescriptive in that respect. With regard to having a representative from the insurance banking industry on the board, we had this argument on Committee Stage. Its interests are well represented. If different people were to be nominated to the board, I would be fearful that they would have more in mind the interests of the organisations they represent rather than the broad view in relation to pensions. I am not saying that about insurance brokers, but much of what they said related to their remit. In any event, the Insurance Federation is represented on the board and, to a certain extent, it would look after the interests of insurance brokers.

Amendment, by leave, withdrawn.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes I move amendment No. 75:

In page 119, after line 6, to insert the following:

“60.–(1) For the purposes of persons who obtain short-term employment contracts within the public sector, nothing shall prevent such persons from continuing to make contributions to the pension scheme or pension plan that they contributed to prior to the taking up of employment within the public sector.

(2) In this section ‘short-term employment contracts' has the meaning of a contract in any part of the public sector for not more than 5 years.”.

I raised this matter in relation to short-term employment contracts in the public sector on Committee Stage. Has the Minister a note on this amendment?

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I oppose this amendment, as it is difficult to see how this proposal would work in practice, given the voluntary nature of our occupational pensions. The Department of Enterprise, Trade and Employment has set up a tripartite group to examine the transposition of Directive 1999/70EC on fixed-term work. It is possible that this issue will come up at that forum. I will write to the Minister for Enterprise, Trade and Employment and advise her and the Department on the issue raised by the Deputy.

Amendment, by leave, withdrawn.

Acting Chairman: As it is now 7 p.m., I am [690] required to put the following question in accordance with an order of the Dáil of this day, “That Fourth Stage is hereby completed and the Bill is hereby passed”.

Mr. D. Ahern: Information on Dermot Ahern Zoom on Dermot Ahern I must return to the Seanad for one or two small amendments but since it is my last occasion here with the Bill I wish to thank all concerned. It is an extremely complex Bill, probably the most complex legislation that has come before this Dáil and probably one of the most complicated to have come before the Houses of the Oireachtas in the last number of decades. I want to place on record my thanks to Opposition Members, both here and in the Seanad. They could have interfered with the progress of this Bill, given that time was of the essence in the run up to the general election, but they chose not to and I thank them for that, as do the officials in my Department.

This is agreed legislation but I know people were put to the test in relation to its examination, both here and in the Seanad. In fact it was probably more difficult in the Seanad than in the Dáil. I thank my officials, who were absolutely excellent over the few years that this legislation has been in gestation. I thank all the people who made representations and also the staff of both Houses, who had difficulties introducing all the amendments at every Stage in both Houses.

Mr. B. Hayes: Information on Brian Hayes Zoom on Brian Hayes I thank the Minister for facilitating us. The officials in his Department have made great efforts to keep in contact with Opposition spokespersons and we appreciate that. I congratulate him for the work they have put into this legislation. I concur with the Minister in his thanks to the Bills office. I received a call last night at 11.30 p.m. about late amendments. They have done a huge job over the past number of weeks because of time pressure. I hope this legislation will have the intended effect.

Mr. Broughan: Information on Thomas P. Broughan Zoom on Thomas P. Broughan I add to that the voice of the Labour Party and congratulate the officials, led by Miss Vaughan, and also the Minister for finally getting the Bill through.

Question put and agreed to.

Acting Chairman: As the Bill is considered by virtue of Article 20.2.2º of the Constitution to be a Bill initiated in the Dáil, it will be sent to the Seanad.


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