Clare on the unilateral wind-up of the CRC pension scheme, undertaken without any consultation with staff who had paid into it all their working lives. The treatment of staff throughout has been shocking, and there are major questions around why the scheme needed to be wound up at all. Transcript below.
Deputy Clare Daly: There is something incredibly rotten around this. It has the potential to put other CRC controversies into the shade. Overnight, unilaterally and without warning, a pension scheme was shut down that loyal staff members had paid into all their working lives. Subsequent to that decision, those staff members have been unable to meet the members of the board of the CRC who have no problem going to a gala dinner in the Burlington tonight. It is absolutely reprehensible. As other Deputies have said, the CRC plan in 2011, as with other defined benefits schemes, did not meet the minimum funding standard requirements. On 24 March 2014, the CRC’s actuary, Mercer, declared that the funding proposal was on track to meet the minimum standard by next year. If the CRC plan was on track in 2014, why was it closed down in such a hurry by the CRC board with effect from 18 May 2016? Can the Minister answer that? What went wrong between March 2014 and May 2016? Did Mercer give poor financial advice which led to the scheme closing given that contributions increased and a de-risking strategy was put in place?
There are conflicts of interests at the heart of this. Mercer appears on all sides of the equation in this. The company provides administration, actuarial services and consultancy advice to the CRC meanwhile the so-called independent trustee of the plan is the Irish Pension Trust, which is owned by Mercer. It is an absolutely clear-cut case of a conflict of interest. Not only that, it has completely been missed that it appears an integrated, defined-benefit pension scheme with a contribution rate of 35% could not support the continuance of entitlements under the plan. How in God’s name can that be? It does not add up. The scheme must be reinstated until such time as comprehensive investigations around this are held. I urge the Minister to secure that.
Minister of State at the Department of Health (Deputy Finian McGrath): I thank the three Deputies for raising this matter which I take today on behalf of my colleague, the Minister for Health, Deputy Simon Harris. The Central Remedial Clinic, CRC, is funded by the Health Service Executive under section 38 of the Health Act 2004. Therefore, the CRC is accountable in the first instance to the HSE in relation to pay and superannuation matters. The CRC employs approximately 290 people, of whom approximately 45 are members of a privately funded pension plan operated by the trustee, the Irish Pensions Trust. It is important to explain at the outset that neither the Department of Health nor the Department of Public Expenditure and Reform has any role or function in relation to the operation of this funded pension plan which was established some decades ago by the CRC.
Following an extraordinary meeting on 17 May, the board of the CRC decided to cease contributions to the private pension plan. The CRC then issued notice of termination of contributions to the trustee, Irish Pensions Trust Limited. The notice provided that with effect from 18 May 2016, the CRC was terminating its liability to contribute to the plan. Neither the Minister, Deputy Harris, nor the Department had any advance notice from the CRC of its intention to cease contributions to the pension plan. The Department of Health was informed of the CRC decision on 18 May. It is regrettable that the CRC took a decision to cease contributions to the scheme without first consulting with the employees concerned and the HSE. In fact, the Department had previously highlighted to the CRC that any proposal in relation to any pay or pension matter must first be submitted to the HSE. It was also explained to the CRC that Department of Public Expenditure and Reform sanction would be required for any CRC proposal.
Following receipt of information from the CRC on the winding up of the scheme, the CRC was requested as a matter of urgency to prepare viable alternative proposals in conjunction with the HSE. The HSE has today confirmed that it is working with the CRC to find a viable solution in relation to the employees concerned but that as yet, a detailed business case has not been submitted by the CRC. The Minister assures the House that once a detailed proposal is received by the Department, it will be examined as a matter or urgency. The proposal will be considered in conjunction with the Department of Public Expenditure and Reform, which is responsible for the implementation of Government policy in relation to public service pensions. The Minister and I ask the CRC to work as quickly as possible with the HSE to resolve this situation which has left the employees concerned in a most difficult position.
Deputy Clare Daly: The Minister says it is regrettable that the CRC made this decision. I call it bizarre, sinister and highly suspect. It just does not add up. If our concern is to have any meaning whatsoever, the only instruction we should be issuing to the CRC is to reinstate the scheme until comprehensive issues involving the decision to wind it up can be investigated. It does not add up. If one looks at the scheme, it was very well funded. A deficit of €2 million is very little. There were breaches of the Pensions Act. The trustees could have had and lawfully did have nine months to come up with an alternative funding plan. As such, why was a decision taken 18 days after the actuarial assessment? There are serious questions about some of the assumptions applied by Mercer in relation to the scheme. The report which was given to the staff has been redacted in many parts so that we cannot even have an accurate assessment of the actuarial advice that was given. There seems to have been bizarre and questionable behaviour and I urge the Minister to intervene to hold people to account and not just to look at alternatives now. He should halt it, get it back to where it was and hold people to account.
Deputy Finian McGrath: I thank my colleagues for their questions. I will address each specifically. I accept that Deputy Penrose received no acknowledgement. It was a disgrace as far as I am concerned and I will follow up on the issue. Regarding Deputy Maureen O’Sullivan’s points on good faith, the great service of the staff and accountability, I have also raised these issues and will discuss them again later. Deputy Clare Daly mentioned the idea of shutting down on a loyal workforce. I am familiar with the staff of the Central Remedial Clinic, CRC. I have made my views known to the board’s chairperson many times. Even though this matter is not necessarily in my remit, I have met some of the staff and heard their case. Many of their views have been expressed in the Chamber.
Other issues exist. For example, this raises serious questions of financial and corporate governance. I have concerns in that regard. The majority of the staff are unaffected but I am concerned about the 47 individuals on whom this situation will impact.
I will be answering a question on an issue that I have been addressing in recent weeks, namely, the level of monitoring of this matter. Before yesterday, there was no contact with the HSE since the actuaries began their review. I am demanding answers of the HSE and the CRC as to why there was no communication from either side during this period and what level of monitoring was conducted. Both knew that the problem existed.
The CRC does not have unilateral authority to move employees onto the single public service pension scheme. This matter must be discussed with the HSE. The pension scheme had a serious and escalating gap and it is incredible that such a point was reached with so little information being passed to the HSE or the Minister. I want to see a speedy solution. I am asking the CRC to proceed with its talks with the HSE on this matter and am demanding a full report on the outcome of whatever meetings are held so that we can determine how to proceed in the best interests of the taxpayers and the 47 people affected.