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Social Welfare and Pension Bill 2014 Wednesday 18th June 2014 – Dáil Speech on my Amendment regarding deferred pension members

Anthony Lawlor (Kildare North, Fine Gael)

I move amendment No. 23:

In page 23, between lines 19 and 20, to insert the following:”(2) The definition of a qualified member as a trustee of a pension fund and the definition of a person eligible to vote for the trustee of a pension fund means an active member or deferred member or a pensioner member of the relevant scheme on that date or on such previous date.”.

This arises out of an anomaly in the legislation whereby deferred members have no rights or say in who are the trustees of a pension fund. I can see a problem associated with it whereby a short-term deferred member may be a long-time member of the pension fund but towards the end of his career either lose his position or change jobs and as a result has no say whatsoever in who would represent him on the trustees of the pension fund. It seems totally unfair. We are in a democratic state and I would have thought that all those who are members of a club, an organisation or, in this case, a pension fund would have the right to a say as to who should represent him or her. Not alone do they not have a right to a say as to who should represent them, they themselves cannot be voted into the position of trustee of the pension fund. If a person has made contributions over a long number of years and circumstances have changed, where the person has moved on to another employment or the company provided a redundancy package and this individual has moved on as a result, the person cannot have any say in the role of a trustee. I agree the trustee is supposed to represent everybody, but it is unfair that someone who is part and parcel of the pension fund does not have a right to vote.

We should look at this. As to whether we should do so in the Bill, I saw it as an opportunity when we were talking about the role of trustees in pension funds.

I thought it might be an opportunity to define who a trustee was and who could vote for the trustees. I ask the Minister of State to examine this matter and give it serious consideration. I am also aware that we may have to take on board potential EU legislation that may impinge on this area. We should look at this issue, however, to see whether we can do something in this Bill or in future legislation to give deferred members the same rights as pensioners and active members who are paying into the pension fund.

Dinny McGinley (Donegal South West, Fine Gael)

I do not propose to accept this amendment. Procedures for the appointment of trustees are usually set out in the trust deed and rules of a pension scheme. Section 62 of the Pensions Act allows for regulations to be made to provide for member participation in the selection of persons to be appointed as trustees. I understand that, in practice, the provisions of the member trustee regulations are rarely used and the composition of the trustee board is very often agreed at scheme level on a consensual basis.

It should be noted that under existing trust law, all trustees, no matter how appointed, have an obligation to act in the best interests of all members. Trustees cannot act as a representative or advocate for a particular subset from which they are drawn but must serve all classes of beneficiary impartially. In its guidance to trustees, the Pensions Authority reaffirms these principles which are also complemented by the provisions in the Pensions Act.

The current focus in relation to trusteeship is on raising the performance of trustees and proposing minimum standards for trustee education, knowledge, understanding and behaviour that would be considerably more demanding than the current trustee training requirements. This is with a view to supporting best outcomes for all scheme members.

This issue of trusteeship will be considered in the context of evolving pension policy and in particular in the context of the report by the Pensions Authority arising from the defined contribution consultation process, which the Pensions Authority launched in August 2013. I expect the report on this consultation to be with the Minister in early autumn.

Proposals are emanating from the European Commission in relation to amendments to Directive 2003/41/EC on the activities and supervision of institutions for occupational retirement provision. These proposals include enhanced governance structures for pension schemes which have significant impacts on the roles of the scheme trustees. The current proposals require trustees of a pension scheme to hold relevant professional qualifications. Negotiations on these proposals are ongoing and are likely to continue until the end of next year. The Oireachtas Joint Committee on Education and Social Protection was briefed on the proposals to amend the directive. The committee will be kept up to date on progress.

I can assure the House that the Department and the Pensions Authority are committed to ensuring all trustees, irrespective of their origin, administer their schemes in the best interests of all their members and in accordance with the provisions of the Pensions Act. I must stress again that the trustees of a pension scheme are required under trust law to act at all times in the best interests of scheme members, irrespective of whether trustees are appointed under the terms of the trust deed and rules of the pension scheme or whether they are appointed under regulations made under section 62 of the Pensions Act.

Anthony Lawlor (Kildare North, Fine Gael)

I somewhat expected that answer and I understand that a trustee has to represent everybody who is a member of a pension fund. What I am trying to get across, however, is that some members of that pension fund – the deferred pension members – do not have a right to vote. Nor do they have the right to go forward as trustees. My amendment seeks to give them an equal right similar to the active members and pensioner members. I understand what the Minister of State said about the review. I can also see that perhaps in future we will introduce legislation to cover deferred members, but currently they do not have the same rights, irrespective of how long they may have been paying into a pension fund. Some may have been paying into such a fund for five or six years, while others may have done so for 20 years. They might have deferred their pension for one reason or another, but they do not have any rights to vote for trustees or to act as trustees.

In a democracy, we need to give these people who have paid into a pension fund the right to choose those trustees who represent them. I welcome the fact there is an ongoing review of this matter. I hope it will be dealt with in future legislation. I know my amendment is a bit rough but I can tailor it to ensure deferred members have rights. We should define how long they have to be in a pension fund before getting voting rights. Having listened to the Minister of State’s comments on EU directives and the report of the Pensions Authority, I hope we will get legislation to allow deferred members to have the same rights as active and pensioner members.

Dinny McGinley (Donegal South West, Fine Gael)

The issue of a trusteeship will be considered in the context of evolving pension policy and in particular in the context of the Pensions Authority’s report arising from the defined contribution consultation process, which the authority launched in August 2013. I expect the report on this consultation to be with the Minister in early autumn.

While acknowledging the Deputy’s points, I must stress that the trustees of a pension scheme are required under trust law to act at all times in the best interests of scheme members, irrespective of whether the trustees are appointed under the terms of the trust deed and rules of the pension scheme or whether they are appointed under regulations made under section 62 of the Pensions Act.

Olivia Mitchell (Acting Chair: Dublin South, Fine Gael)

Is the amendment being pressed?

Anthony Lawlor (Kildare North, Fine Gael

Is the Minister of State assuring me there will be a review of this when the report comes before the Minister in the autumn?

Dinny McGinley (Donegal South West, Fine Gael)

Yes. The Pensions Authority’s report arises from the defined contribution consultation process, which the authority launched in August 2013. I expect the report on this consultation to be with the Minister in early autumn.

Anthony Lawlor (Kildare North, Fine Gael)

Okay. I will not press the amendment as the Minister will have the report in early autumn.

ENDS