Joan Burton (Dublin West, Labour) | Oireachtas source

Defined benefit pension schemes in Ireland are in general set up under the law of trust. The trustees of such pension schemes have a fiduciary duty to act in the best interest of all scheme members. The Pensions Act provides for a funding standard which applies to funded defined benefit pension schemes. The funding standard requires a defined benefit pension scheme to maintain sufficient resources to meet the liabilities of the scheme in the event of the winding up of a scheme. Where a scheme fails to satisfy the funding standard, the trustees of the scheme are required to submit a funding proposal to the Pensions Board outlining their plan to restore scheme funding. Section 50 of the Pensions Act makes provision for the restructuring of a defined benefit pension scheme where the scheme fails to comply with the funding standard. The Pensions Board can, either unilaterally or on an application from the trustees of the scheme, issue a direction to the trustees of a scheme to restructure scheme benefits. Such a direction by the Pensions Board only facilitates a restructuring of benefits designed to enable the scheme satisfy the funding standard.

The current provision in section 50 of the Act allows the trustees to consider the benefits of active and former scheme member and future post-retirement increases in benefits. The changes I am bringing forward in the Social Welfare and Pensions (No. 2) Bill, which is currently before the Seanad, will extend these options to include a limited portion of pensioner benefits. Trustees will now have the option to consider up to 10% of pensioner benefits where the annual amount of pension is between €12,000 and €60,000 and up to 20% of benefits where the annual amount of benefits is greater than €60,000. Pension benefits up to €12,000 are protected and cannot be included in any consideration of a restructuring of scheme benefits.

All directions issued by the Pensions Board to date have been as a result of an application to the board by the trustees of a scheme.

Additional information not given on the floor of the House

Before the trustees make such an application, they must consult the employer, the scheme member, any person receiving benefits from the scheme and the authorised trade union representing scheme members. The Pensions Board has discretion as to whether to issue a direction following an application by the trustees of a scheme. There are no indications that continued restructuring of scheme benefits gives rise for concern. As I said at the outset, the trustees of a defined benefit pension scheme are required under trust law to act in the best interest of all scheme members. The changes I am proposing to section 50 of the Pensions Act will enhance the ability of the trustees to protect the overall best interest of scheme members.

See this speech in context