Éamon Ó Cuív (Galway West, 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 their accrued liabilities in the event of the scheme winding up. Where schemes do not satisfy the funding standard, the sponsors or trustees must submit a funding proposal to the Pensions Board to restore full funding within a three-year period.

At the end of 2009, there were 254,325 members in 1,192 defined benefit schemes subject to the funding standard. It was estimated at that time that in excess of 75% of these schemes were in deficit. A recent survey undertaken by the Pensions Board found that 70% of schemes were reported to be in deficit. However, the 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 conscious of the pressures on both sponsoring employers and pension scheme trustees, arising from the very significant losses incurred by pension funds during 2007 and 2008. While schemes recovered some of their losses in the past year or so, I am anxious to ensure, in so far as possible, that pension scheme trustees and employers have sufficient time and space to assess fully the implications for their schemes and the remedial action they can take. This was the thinking behind the implementation of a number of temporary measures in December 2008 to ease the funding pressures on pension schemes.

In addition, the Pensions Act was amended by Social Welfare and Pensions Act 2009 to provide for a number of measures which would support the trustees and employers in responding to the significant challenges they encountered following the down turn in the financial markets. In March this year, the Government launched the national pensions framework. It sets out the our intention for a radical and wide-scale reform of the Irish pension system. I announced last month that work on the new defined benefit pension model, as outlined in this framework, would be expedited. My Department will aim to introduce this new model following legislative changes on 1 July 2011.

Following this announcement, the deadline of 30 November for the submission of funding proposal to the Pensions Board was deferred. It is anticipated that the deferral of this deadline will allow schemes time to take account of reforms to the defined benefit model in the preparation of funding proposals for submission to the Pensions Board by a date which will be announced by the board.

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