Mr. Jerry Moriarty:

I welcome the opportunity to attend the committee this morning. The Irish Association of Pension Funds, IAPF, represents pension savers with an aim of ensuring pensions in Ireland are secure, fair and simple. We are a not-for-profit membership organisation. Our members are pension schemes set up by employers for their employees, and companies that provide services to those schemes. The services we provide for our members are representation, education, and information. In terms of the Bill we are looking at today, we have advocated for some form of debt on employer legislation for quite some time, with correspondence on the issue with the Department as far back as 2008. In a joint paper with the Society of Actuaries in Ireland, submitted in December 2008, we advocated for some form of debt on employers in order to provide greater security for members of pension schemes, discourage employers from abandoning pension schemes, and to provide greater flexibility in the ongoing funding of schemes.

Since 2008, there has been a significant decline in the number of defined benefit schemes and the number of active members, which are employees who are continuing to accrue benefits within those schemes. As a result of funding issues, many schemes have restructured, often reducing members' benefits and also requiring increased funding from employers. According to the most recent figures from the Pensions Authority, 126 of 611 defined benefit schemes did not meet the minimum funding standard. However, in total, the aggregate assets of defined benefit schemes, at €64.1 billion, were higher than the total aggregate liabilities, which were €59 billion. Schemes that do not meet the minimum funding standard are required to put a funding proposal in place, which is designed to get the schemes back to meeting the standard. The proposal has to be agreed by the trustees, the employer, and the actuary to the scheme. If the proposal is for a period longer than three years, it also has to be agreed by the regulator, the Pensions Authority.

Defined benefit provision is declining worldwide for many reasons, including cost and fluctuation of cost, accounting practices and changes in work practices. Ireland is no different in this respect. That has been reflected in the decline in the number of schemes and active members of schemes, with just over 100,000 active members of private sector defined benefit schemes today. A concern often raised with this type of legislation, which imposes a contingent debt on employers, is that it may precipitate the closure of schemes in order to avoid its impact. However, schemes have had plenty of opportunities to close or wind up in recent years, and this legislation has now been under consideration for two years with no evidence of that happening. It could be argued that the schemes that now remain, therefore, have already decided they are in it for the long term. It should also be remembered that the rules of the scheme may give trustees the power to request contributions from the employer in a wind-up situation which may have the opportunity to bring funding above the minimum funding standard level.