Éamon Ó Cuív (Galway West, Fianna Fail)

Pension schemes have been significantly impacted by the downturn in the financial markets. Defined benefits pensions schemes are subject to the funding standard requirements as set out in the Pensions Act 1990, as amended. In response to the crisis, this funding requirement was eased to allow schemes assess the impact of the crisis and determine an appropriate response. In addition, the Social Welfare and Pensions Act 2009 provided a range of legislative measures to further help the trustees-employers of pension schemes respond to the funding difficulties in pension schemes.

Further measures have been announced in the national pensions framework which are being progressed by the national pensions framework implementation group. In particular, I announced in October the development of the new model for defined benefits pension schemes proposed in the national pensions framework would be expedited by the framework implementation group.

The amendment to the Pensions Act which I am now bring forward arises from proposals from the Irish Association of Pension Funds and the Society of Actuaries under which a new type of annuity policy, which will make reference to euro-nominated bonds, will be available for purchase by Irish pension schemes and investors. In purchasing this new type of annuity and-or associated bonds, pension schemes will benefit from higher yields than are currently available from French and German markets thereby reducing the cost to pension schemes in meeting their pension liabilities and the requirement of the funding standard.

In an Irish context, the National Treasury Management Agency will issue long-term bonds with a period appropriate to match the funding needs of a typical pension scheme. These bonds will be available for purchase by the insurance industry who will issue annuities based on Irish yields or sovereign annuities. These annuities can be bought by pension schemes to match their pensioner liabilities. It is proposed to make these bonds available from 1 January 2011. These bonds can of course be purchased in the normal course by pension schemes.

This amendment is part of a package of measures which are being introduced to assist defined benefit pension schemes and make them more secure in the future. Once these annuities and associated bonds are available, the funding standard amended to reflect engagement with this new annuity policy, the new defined benefit model and the deadline for funding proposals introduced early next year, it is not intended to revisit defined benefits pension schemes. Pension schemes must address their liabilities, their risk and investment strategies in order to ensure that they are properly funded. In other words, we want to introduce a new type of bond that can be bought from the NTMA. There is a double win here because the money that is used to buy these bonds or annuities will go towards funding the State. On the other hand, they give a much better yield than German bonds.

The skills development and internship programme is a new enterprise-led labour market activation initiative aimed at those who are at least three months unemployed. Under this programme, participants will be offered a 12-month placement with host organisations in the private or community and voluntary sectors. In addition to the actual placement, participants will undertake a significant education and training component, which will be certified and will aim to improve their skills and competencies.

FÁS will have responsibility for managing the programme. This will mean that participants will receive a FÁS training allowance equivalent to their social welfare entitlement and will also receive an upskilling bonus of €100 per week during the actual placement phase of the programme.

By providing 12-month placements coupled with a substantial education and training offering, it is intended that the programme will provide a structured pathway to employment for those who are unemployed. The success of the programme will be entirely dependent on enterprises embracing the programme and offering quality placements to the unemployed. The Government has made provision for up to 5,000 places to be supported under this programme. However, this is subject to the level of interest and uptake by enterprises. The Government, through FÁS, will facilitate these placements and provide the education and training provision to participants. Details of the programme are currently being prepared and it is expected to be operational towards the end of the first quarter of 2011.

See this speech in context