Andrew Doyle (Wicklow, Fine Gael)
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Question 8: To ask the Minister for Finance if he has received estimates of the deficits in the pension fund in universities and certain State bodies in meeting EU funding standards, which he has offered to take over; and if he will make a statement on the matter. [38759/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Discussions are under way with the trustees and administrators of the funded pension schemes of the five older universities and a number of non-commercial semi-State bodies with the aim of adopting a new approach to dealing with the liabilities of these schemes. The semi-State bodies involved are the IDA, SFADCo, FÁS, Bord Bia, the Irish Goods Council, the Arts Council, CERT and a number of regional tourism organisations. These university schemes have been closed to new members since 2005 and schemes for post-2005 members operate on a pay-as-one-goes basis. The discussions follow a recommendation by a working group established by the Higher Education Authority which considered the position of the universities' pension schemes.

As the Deputy is aware, all funded schemes must now meet minimum funding standards under EU law unless an appropriate guarantee is provided by the State. This has presented problems for the universities and non-commercial semi-State bodies with funded pension schemes where the Government is, in effect, responsible for the cost of pensions but where this is not clear enough to warrant exemption under EU law. It should be noted, however, that the Government is acting in compliance with EU law.

The schemes in question have been included, pending the conclusion of the discussions with the trustees or administrators of the schemes in SI 295 of 2008, Occupational Pensions Schemes (Funding Standard) (Amendment) Regulations 2008, and are therefore exempt from the funding standard in the Act. It is proposed, if the trustees and administrators of the schemes agree, that the assets of the schemes be transferred to the State with the liabilities, which would then be met, effectively, by the State on a pay-as-one-goes basis in future. The pension terms and conditions of the various schemes would remain the same. If agreement is reached, legislation to give effect to all this would be required.

On the basis of the information available at present, it is estimated that the value of the assets of all of the funds in question at the end of 2007 was approximately €2.3 billion and that, in 2005, the liabilities of the schemes in question were also approximately €2.3 billion. Clearly, these estimates must be updated.

The extent of the liabilities is one of the issues which will be clarified in discussions with the schemes. The liabilities in relation to these schemes are the defined benefits to which the members are entitled and for which the Government is already in effect responsible. Under the proposal, these liabilities will be met by the Government on a pay-as-one-goes basis, in line with the approach taken on public service pensions generally.

Richard Bruton (Dublin North Central, Fine Gael)
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Why does the Minister have a 2007 valuation on the assets side and a 2005 valuation on the liabilities side? If the Minister has made a formal proposal to take on these funded schemes without knowing what are their net liabilities, it indicates the Department does not assume liabilities with a great deal of foresight.

Is it not bizarre that when the State takes on liabilities of this nature, recognition is not given to the budgeting position? The €2.3 billion in assets the Government will take in will appear as a reduction in its borrowing requirement, whereas the liabilities it proposes to assume, the value of which will clearly exceed €2.3 billion, will not be accounted for anywhere in the Government's budgeting statements. Is this not a wake up call to factor pension liabilities into our annual Budget Statement in order that we know what they are and what new liabilities we assume when we employ people or make a decision such as that proposed in this case? Surely the current position must change.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I assure Deputy Bruton and the House that no agreement has been reached to take over the assets and liabilities in the question. The provisional character of the figures I provided is provisional and I clearly indicated that the figures will have to be revised. An agreement has not been finalised and we will have to be in possession of all the facts before any discussions about an agreement can take place.

Richard Bruton (Dublin North Central, Fine Gael)
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The letter issued by the Department is not as qualified as the Minister is trying to make out.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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It is important to note, however, that the public bodies in question have, by and large, no substantial revenue raising capacity. Therefore, an issue would arise in any event as to whether the State bore ultimate responsibility for their pension liabilities.

On the question of the taking in of assets and payment of liabilities, a decision that will have to be taken by the Government in the context of the discussions and provided an agreement is concluded is the appropriate destination for any such assets. An issue will arise as to whether the assets should be vested in the pension fund or whether, as Deputy Bruton suggests, they should be taken into the maw of the general Exchequer balance.

On the balance of the liabilities which may accrue on foot of future pension entitlements, I concur that it would be a worthwhile exercise to have a more detailed publication of these in the budgetary exercise.

Joan Burton (Dublin West, Labour)
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Does the practice described not sound a little like Enron accounting? One takes in the assets on one's vehicle, namely, the national accounts, while the liabilities are left hanging out in a little note. Enron used to do this and it was one of the factors that brought down the company. Funny accounting, like funny financial products, has had its day.

The Minister and his colleague, the Minister for Social and Family Affairs, announced this measure as a great coup in a note published around the time the Dáil went into recess in July. We now learn the Minister is having some thoughts — correctly — about what the exercise entails. Has he established whether any of the pension schemes involved are in deficit? Is the Department in negotiations, formal or otherwise, with the trade unions, including the trade unions represented among the pension trustees of the funds in question? If the Minister decides to proceed with this proposal, will legislation be required and, if so, when will it come before the House?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Yes, we will require legislation but we are not yet at that stage because we would first need an agreement with the relevant bodies and we have not yet reached that stage either. Furthermore, we need to be in possession of the full facts before we proceed to negotiate any such agreements.

Kieran O'Donnell (Limerick East, Fine Gael)
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May we assume from the Minister's comments that the funds from these pension schemes will be placed in the National Pension Reserve Fund? If that is the case, will they be used on budget day as an adjusting item for the general Government balance?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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No, the Deputy may not make that assumption from my reply. I stated that the ultimate destination of the funds had to be examined with care. The pension fund is one option, while the general Government balance is another.

Kieran O'Donnell (Limerick East, Fine Gael)
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Will they be dealt with as a non-adjusting item?

Brendan Howlin (Wexford, Labour)
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We must move on to the next question.