Mary Hanafin (Dún Laoghaire, Fianna Fail)

The security of occupational pension schemes is of paramount importance to the Government. Trust law, under which most pension schemes are established, ensures that the assets of the scheme are legally separate from the assets of the employer and are not available to other creditors should an employer become insolvent. Trustees of occupational pension schemes have responsibility for ensuring that the entitlements of scheme members are adequately protected and that they receive the pensions due to them. In addition to the safeguards provided by trust law, the Pensions Act 1990 provides for the regulation of pensions schemes in Ireland. Under this Act, defined benefit pension schemes must meet a minimum funding standard, which requires that schemes maintain sufficient assets to enable them discharge accrued liabilities in the event of the scheme winding up. Where schemes do not satisfy the funding standard, the sponsors-trustees must submit a funding proposal to the Pensions Board to restore the scheme to full funding.

It is estimated that in excess of 90% of defined benefits pension schemes are in deficit. However, the full extent of the level of under-funding will not be fully apparent until all schemes carry out their next actuarial assessment and report the results to the Pensions Board. This Government has sought to ensure, in so far as it can, that sponsoring employers and pension scheme trustees have sufficient time and space to fully assess the implications of the current difficulties for their schemes and the remedial action they can take. Indeed, we recently implemented a number of short-term measures to ease the pressures including additional time for schemes to formulate funding proposals; greater flexibility — more than ten years — for recovery plans in appropriate circumstances; allowing a replacement recovery plan to extend beyond the end date of the original plan; and enabling the board to take into account voluntary employer guarantees in approving recovery plans.

Furthermore, to ensure these concessions are not seen as a weakening of supervision arrangements, the Pensions Board will not accept recovery plans which do not demonstrate an appropriate investment approach. The Government is considering a number of options regarding the ongoing security of occupational pensions. Decisions made in this context will be considered as part of the development of the national pensions framework, which is due to be finalised shortly.

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