Brendan Howlin (Wexford, Labour)
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Our time has been shortened. I advise Deputies that we will conclude at 4.45 p.m.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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Question 1: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the deficit in the FÁS pension fund; and if she will make a statement on the matter. [41134/09]

Mary Coughlan (Donegal South West, Fianna Fail)
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The valuation figures for the FÁS closed superannuation scheme, which solely covers former AnCo staff, as at 31 December 2008 are the following; the market value of pension fund assets is €328 million; and the present value of pension liabilities is €631 million, which leaves a deficit in the FÁS pension fund of €303 million.

The valuation has been prepared by a qualified independent actuary under accounting standard FRS 17. This standard was issued by the Accounting Standards Board in November 2000. The standard deals with the treatment of pensions and other retirement benefits in company accounts, and its principal focus is to make reported accounts for pensions more transparent to ensure greater consistency between entities in the way pension costs are disclosed. It effectively provides a snapshot of assets at current value and the present value of liabilities into the future based on actuarial assumptions such as annuity rates, inflation, mortality rates, etc.

The current deficit in the fund reflects the collapse in equity values over 2008 and the early part of 2009, which has led to a significant fall in the total market value of pension scheme assets. Whereas the present value of funded pension liabilities has also dropped over the same period, it has done so to a lesser extent. The asset figures have improved in the interim but remain subject to market fluctuations.

In April 2008, following consideration by the Government of a proposal that the assets of the funds and the liabilities of a number of State pension schemes be taken over by the State, the Government decided in principle to authorise the Department of Finance to enter into discussion with the trustees and administrators of the respective pension funds with a view to winding up the funds. It has also decided to have the NPRF take over the assets of the pension funds and have the liabilities of the schemes taken over by the State. Once the transfer of the assets was effected, the schemes would be operated on a pay-as-you-go basis.

The pension funds in question included several non-commercial State body schemes under the aegis of my Department, including FÁS, SFADCO, IDA and the National Goods Council. The FÁS closed superannuation scheme provides benefits for pensionable staff of FÁS who were former AnCo staff.

Following the consultation with the trustees and administrators of the schemes concerned, legislation was prepared in order to enable the transfer of the assets and liabilities of the pension funds. The necessary powers were included in the Financial Measures (Miscellaneous Provisions) Act 2009. A transfer order must be made under the Act to give effect to the transfer of each fund.

In preparation for the transfer of assets from the FÁS superannuation fund to the National Pensions Reserve Fund, the superannuation scheme, which was set up under SI 515 of 1998, has recently been amended by SI 414 of 2009. Provisions in respect of the closed spouses' and children's contributory pension scheme are set out in SI 420 of 2009.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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I thank the Tánaiste for her response. Many members of the public would be amazed to see a deficit of €303 million in the FÁS pension fund at a time when its chief executive got a pension benefit of €1.4 million in very questionable circumstances. What is the current deficit of the FÁS pension fund?

The Tánaiste also mentioned the Financial Measures (Miscellaneous Provisions) Act 2009, which transfers the assets from the various semi-State agencies to the NPRF. What is the total deficit in what is being transferred from those funds to the NPRF, and how will that deficit be made up?

Mary Coughlan (Donegal South West, Fianna Fail)
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It is important to reiterate that this scheme only refers to former AnCo staff and not to the person referred to by the Deputy. The deficit in the FÁS pension fund is €303 million and that is made up of a market value of fund assets of €328 million and liabilities of €631 million.

We are all aware of difficulties in pension funds and it was on such a basis that the Department of Finance was asked to facilitate the transfer of pension funds of non-commercial State bodies to be administered by the National Pensions Reserve Fund. It would be the fund's responsibility to administer and work through the pension's deficit and the needs of that pension fund.

Legislation was introduced to facilitate that and a transfer order was prepared. I recall signing an SI in regard to the closure of the spouses' and children's contributory pension scheme. It is important to say that new schemes are on a pay-as-you-go basis, which is similar to those involving a number of other non-commercial semi-State bodies.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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Is it correct to say that we are looking at approximately €1.3 billion of a deficit with these pension funds being transferred to the NPRF at the end of 2008 anyway? Will the Tánaiste give an indication of the total exposure of the taxpayer as of now, as the taxpayer will have to foot the bill for the pension fund deficits and liabilities? It will be galling for many members of the public to come up with an additional €1.3 billion to patch up these particular funds in organisations where the chief executives and other senior members have received large golden handshakes under questionable circumstances in the past.

Mary Coughlan (Donegal South West, Fianna Fail)
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I appreciate that the Deputy is trying to introduce an element that has nothing to do with the question but that is beside the point. We are discussing AnCo.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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What is the overall liability?

Mary Coughlan (Donegal South West, Fianna Fail)
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More than 95% of the non-commercial semi-State pensions are now operating on a pay-as-you-go basis, which is very significant. It is appropriate to say that we had separate pension schemes and funds, as well as separate actuarial staff and fund managers looking after this. The Government decided that the best way to address those costs and centrally manage them was under the National Pensions Reserve Fund. That is the most appropriate way to deal with pension liabilities, although these will fluctuate depending on the needs of the fund.

I do not have the figure for the State liability of commercial non-State staff but I am sure we could get it through the Department of Finance.