Regina Doherty (Meath East, Fine Gael) | Oireachtas source

I will ask the Deputy to humour me because I must read this bit out before I can get to the part for which she is waiting. I thank her for raising this matter. I know why she has done so. Scheme trustees have duties and responsibilities under trust law, other relevant legislation and the Pensions Act 1990, as amended. The duties of a pension scheme trustee include administering a scheme in trust in accordance with the law and the terms of the trust deed and rules.

Consequently, any decision made by corporate or individual trustees of an occupational pension scheme are governed by the relevant legislation and rules set out in the trust deed and the rules of the particular scheme. Scheme trustees must always act in the best interests of scheme members.

Usually the options available to members for taking benefits will be set out in the trust rules. In some cases, the benefit structure may be inflexible, leaving the member little or no choice as to the form his or her benefits will take. This is something I recently brought to the attention of Deputy Daly and she kindly helped me with it, although we could not provide any help.

Where a member of the pension scheme reaches retirement age, a pension is immediately payable. Part of the pension may be taken in cash, and once the entire pension is not taken up by this, the trustees then have a liability to pay a pension income to the member. The trustees then either pay a pension income regularly out of the fund or they buy an annuity to secure the future liability to pay a pension. On wind-up, where the pension is being paid out of the fund, the trustees normally purchase annuities for the existing pensioners.

Section 48 of the Pensions Act sets out the priorities on winding up a scheme. It sets out the order in which the liabilities must be discharged and how they may be discharged for members. When a scheme winds up, section 48(3)(b) provides that the trustees may, notwithstanding anything contained in the rules of the scheme and without the consent of the member concerned, discharge the liability for benefits payable by any member by one of the following: transferring the benefits of each member into a new pension scheme; purchasing an approved assurance policy with a company or insurance agency that sells life insurance; or transferring the benefits into another arrangement for the provision of retirement benefits such as, for example, a PRSA or a buyout bond.

It must be noted that this discretionary provision and the trustees are not compelled to discharge the liability in this way. The wind-up options in section 48(3)(b) are contingent on the requirement that the scheme’s policies or contracts are approved by the Revenue Commissioners under the Taxes Consolidation Act 1997, as amended. The Act sets out the circumstances in which retirement benefit schemes are approved by the Revenue Commissioners for tax purposes. In other words, transfers from the scheme being wound up must be made into schemes or products approved by the Revenue Commissioners and which, therefore, comply with Revenue rules.

Section 772 of the Taxes Consolidation Act allows for flexible options on retirement, that is, the approved retirement fund, ARF, option. The purchase of an ARF is not available to members of defined benefit schemes, subject to certain exceptions. Legislation and policy on taxes and access to ARFs are a matter for the Department of Finance, as Deputy Daly said. I know why Deputy Daly is raising this matter. I agree with her.

I have asked my Department to refer this particular issue to the Department of Finance. Given that within the next couple of weeks we will launch a public consultation on what will probably be the most far-reaching reform of the private and public pensions industry, it is probably timely that the Department of Finance considers this issue, and that is the effort I will try to bring to bear during the coming weeks.

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