Mary Hanafin (Dún Laoghaire, Fianna Fail)

Under the Pensions 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 full funding within three years. The Pensions Board can allow a scheme up to ten years to meet the standard in certain circumstances.

There are currently 1,355 defined benefit schemes subject to the funding standard. 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.

The Government is very conscious of the pressures on both sponsoring employers and pension scheme trustees, arising from the very significant losses incurred by pension funds during the past year. We are anxious to ensure, in so far as we can, that those involved have sufficient time and space to fully assess the implications of the current difficulties for their schemes and the remedial action they can take.

The Government is continuing to consider the issues in regard to both the maintenance of the funding standard and the wider issue of future security of the supplementary pensions sector. We recently implemented a number of short-term measures to ease the pressures currently being felt by many pension funds. Those measures include the granting of extra time for schemes to formulate funding proposals; granting flexibility to the Pensions Board to allow longer periods — more than 10 years — for recovery plans in appropriate circumstances; enabling the board to allow the term of a replacement recovery plan to extend beyond the end date of the original plan in certain circumstances; and enabling the board to take into account voluntary employer guarantees in approving recovery plans. To ensure that 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. I believe that these measures will help all schemes currently in difficulty and will help to ensure the best outcomes for the scheme members.

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