Frank Feighan (Roscommon-South Leitrim, Fine Gael)
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Question 9: To ask the Minister for Social and Family Affairs the percentage of pension schemes failing the minimum funding standard; the number of schemes involved; and if she will make a statement on the matter. [9168/09]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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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 accrued liabilities in the event of the scheme winding up. Where schemes do not satisfy the funding standard, the sponsors-trustees must submit a funding proposal to the Pensions Board to restore full funding within three years. The Pensions Board can allow a scheme up to ten years to meet the standard in certain circumstances.

There are currently 1,355 defined benefit schemes subject to the funding standard. It is estimated that in excess of 90% of defined benefits pension schemes are in deficit. However, the full 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 very conscious of the pressures on both sponsoring employers and pension scheme trustees, arising from the very significant losses incurred by pension funds during the past year. We are anxious to ensure, in so far as we can, that those involved have sufficient time and space to fully assess the implications of the current difficulties for their schemes and the remedial action they can take.

The Government is continuing to consider the issues in regard to both the maintenance of the funding standard and the wider issue of future security of the supplementary pensions sector. We recently implemented a number of short-term measures to ease the pressures currently being felt by many pension funds. Those measures include the granting of extra time for schemes to formulate funding proposals; granting flexibility to the Pensions Board to allow longer periods — more than 10 years — for recovery plans in appropriate circumstances; enabling the board to allow the term of a replacement recovery plan to extend beyond the end date of the original plan in certain circumstances; and enabling the board to take into account voluntary employer guarantees in approving recovery plans. To ensure that these concessions are not seen as a weakening of supervision arrangements, the Pensions Board will not accept recovery plans which do not demonstrate an appropriate investment approach. I believe that these measures will help all schemes currently in difficulty and will help to ensure the best outcomes for the scheme members.

Olwyn Enright (Laois-Offaly, Fine Gael)
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It is not possible to have any weaker supervision arrangements than we have had in place up to now. There has been a lack of effective regulation in this area. Another aspect that is of equal importance was the lack of awareness among employees of the risks to which they were being exposed in that they are only now discovering, in the light of what has happened in Waterford Crystal, the risk to which they are exposed in terms of their pensions. Is the Government considering providing any type of State guarantee for occupational pensions schemes that are in deficit? The Minister said she is examining this area and that a report will be published. When will it be published? Can she at least advise the House today what exact area she is examining in this context? Is this issue being examined in that context? Is the Government considering providing any type of State guarantee for these schemes? Effectively, a massive failure of regulation has exposed hundreds of thousands of people at this stage. The schemes were too heavily invested in equities. In good times they were able to take money out. Now we see the result with approximately 90% in deficit. When does the Minister expect the results for the 1,355 schemes so that we can get an accurate figure rather than that 90% assumption?

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I do not accept that there has been poor regulation of the funds. However, because they are investment funds, the value of the investments has fallen. Where there is scope for further regulation and tightening up — as there is in some cases — we will certainly do that, particularly in the case of employers etc. who are not handing over the pension contributions. We are looking at that. However it is bound by the Pensions Act 1990 and the trust law. As I indicated earlier where changes were needed for the short term, we have certainly made those.

The Deputy asked about a pension protection fund effectively offering a State guarantee. That would basically transfer the risk to the State, which is a major risk. It would involve an agency running the scheme, investing resources and paying.

Róisín Shortall (Dublin North West, Labour)
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It exists already.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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If we consider what has happened in other countries, the USA established such a fund that is now €11 billion in deficit. The UK has 68 schemes that are part of its protection fund with 20,000 members. Some 7,500 schemes are eligible to enter it with a potential deficit of €200 billion. This is what is happening in other countries that have a state protection fund. The Government is not in a position to offer such protection to such funds. Obviously we will try to ensure we make the process as easy as possible and support it in whatever way we can. At the moment the 1,300 or so defined benefit schemes here have liabilities of approximately €100 billion and the provisional estimate is that they would be €30 billion in deficit.

Róisín Shortall (Dublin North West, Labour)
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The Minister does not seem to get the point here. This is not something she can wash her hands of and claim it is nothing to do with the State. The issue for the State is its failure to ensure adequate pension protection. Arising out of the Robbins case the Government is legally required to do that. Its failure to do that is exposing the State to legal action. A pensions expert recently said that members of direct benefit schemes enjoy all the protection of a chocolate fireguard and that the Minister's recent minor actions in this regard were the equivalent of adding a couple of marshmallows to that chocolate fireguard.

For the third time today I ask the Minister when she will take her responsibilities seriously in respect of pension provision. When will she take decisions arising from the protracted Green Paper process? When can we expect her to make a policy announcement?

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I have already made two or three different policy announcements on pensions.

Róisín Shortall (Dublin North West, Labour)
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The Minister needs to make serious ones.

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I have indicated that the long-term policy framework is being considered by Government. When the Government has made a decision, obviously that will be published. I believe the Deputy quoted a journalist — not an expert. As I said earlier, the European Commission is assessing the judgment in the Robbins case to ascertain what additional obligations there may be. As of yet we do not know the outcome of its findings.

Olwyn Enright (Laois-Offaly, Fine Gael)
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They were short-term measures which were important and needed. I do not know whether the Minister grasps the fact that people are terrified about what will happen when they retire. They do not know what will have happened to the schemes that they have paid into for their entire lives. When will the Government reach a decision? We are forced to ask questions on different things. The Minister is ruling some things out, but we do not know what she is ruling in and actually considering. When will we get some kind of coherent response on this matter?

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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The Deputy is correct in one regard. There are many people who had expectations from their pension schemes, believing they had a guarantee of a particular pension following all their contributions only to find it was not a guarantee and that they were at the mercy of whatever the investment was at the time. There is no doubt that there is an obligation and should be further obligations on pension fund managers etc. to ensure that their clients know the consequences of the payments they are making. As I have indicated the short-term and long-term issues are before Government at the moment.