Éamon Ó Cuív (Galway West, Fianna Fail)
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The pension rights of scheme members are protected through trust law and by provision in the Pensions Act 1990, as amended.

The downturn in financial markets has had a significant impact on pension funding and posed major challenges for the trustees of pension schemes in restoring scheme funding. In response to the significant loss in scheme funding, a range of administrative and legislative measures were introduced to assist schemes recover their scheme funding. These measures were designed to ease the funding pressures on pension schemes and provide additional legislative support to secure the viability of a pension and, in the event of a wind-up of a scheme, to ensure that the assets of the scheme were distributed in a more equitable manner.

The Pensions Board provides advice and guidance to scheme administrators. However, trustees of pension schemes and employers are responsible for the affordability of the pension scheme and must take into account the costs of administering the scheme and the investment risks to ensure the protection of the members' benefits and secure the sustainability of the scheme in the long term.

The national pensions framework includes a range of measures to strengthen the regulatory system. These include the powers of the Pensions Board in regard to the regulation of pension schemes will be reviewed; regulation will be introduced to increase the transparency of pension charges; the funding standard will be kept under review; and the information being provided to scheme members will be kept under review and enhanced as considered necessary. The framework also sets out a possible approach to restructuring a pension scheme which might be considered by pension scheme trustees and employees.

A technical implementation group was established in May to develop the legislative, regulatory and administrative infrastructure required to put the reforms announced in the national pensions framework into operation.

Éamon Ó Cuív (Galway West, Fianna Fail)
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The Government has introduced a range of measures to protect the interests of members of defined benefit schemes. In December 2008 a number of measures were introduced to ease the funding pressures on defined benefit schemes. These measures mean the Pensions Board can now grant additional time for the preparation of funding proposals aimed at restoring pension funds; deal as flexibly as possible with applications for approval of funding plans; allow a longer period for recovery plans - more than ten years in appropriate circumstances; allow the term of a replacement recovery plan to extend beyond the end date of the original plan where the scheme is part way through a previous recovery plan but is off-track due to investment losses; and take into account voluntary employment guarantees in approving recovery plans.

In order to ensure these extensions are not seen as a weakening of supervision the Pensions Board will reject recovery plans which fail to demonstrate an appropriate investment approach. The operation of these arrangements will be reviewed by the Pensions Board no later than January 2011.

Éamon Ó Cuív (Galway West, Fianna Fail)
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The role of the Pensions Board is to ensure that best practice is being followed, which is why the question arises about the plans being approved by the board. There is very strong oversight from the Pensions Board. I was asked a question at the press conference attended by the chief executive and I said it was very important that people's pension funds are protected. If there is need for further steps to be taken, I will certainly look at them. I believe that management at the Pensions Board believe they have enough powers at the moment-----

Éamon Ó Cuív (Galway West, Fianna Fail)
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The board has general oversight over the pension funds. Through regulation, it can ensure that the proper mix of investments are made.

Róisín Shortall (Dublin North West, Labour)
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Question 33: To ask the Minister for Social Protection the steps he will take to improve the adequacy and security of pension schemes. [28507/10]

Éamon Ó Cuív (Galway West, Fianna Fail)
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The principle of providing an adequate and secure pension is enshrined in pension policy and reinforced in the Government's policy on pensions, as set out in the national pensions framework. A key aim of the framework is to increase pension coverage, particularly among low to middle income groups, and to ensure that State support for pensions is equitable and sustainable. This will be achieved by the introduction of a new auto-enrolment system. Employees earning above a certain income threshold will be automatically enrolled in this new scheme, with the employee, their employer and the State all making contributions. The Government is also committed to seeking to ensure that the State pension remains at 35% of average earnings.

The issue of the security of a pension scheme is a very important matter. A number of measures were implemented since December 2008 to ease the pressures being felt by many pension funds. Those measures were designed to ease the funding pressures on pension schemes, provide additional legislative support to secure their viability and, in the event of a wind-up of a scheme, to ensure that the assets of the scheme are distributed in a more equitable manner. Furthermore, the Pensions Act was amended to allow for the restructuring of underfunded schemes, to ensure a more equitable distribution of assets in the event of the wind-up of a defined benefit scheme, and to strengthen the powers of the Pensions Board in ensuring that pension contributions deducted from wages and salaries are remitted by employers to scheme trustees. This Act also introduced the pensions insolvency payments scheme to reduce the cost of purchasing pension payments by trustees of pension schemes for their members where the employer has become insolvent.

A technical implementation group has started work to develop the legislative, regulatory and administrative infrastructure required to put the reforms announced in the national pensions framework into operation.

Róisín Shortall (Dublin North West, Labour)
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We are in the midst of the worst pension crisis in decades. What, if anything, will the Minister do about that? How will he address the current funding deficits and how will he prevent those deficits occurring again in the future? The Minister quoted some actions taken by his predecessor since 2008. They really amounted to tinkering with the pensions system. What actions will the current Minister take to ensure that the pension situation is made more secure, given the scale of the deficits that exist at the moment? What will he do to lower the risk profile of Irish pension funds? Has he anything in mind to address that issue? Is he prepared to carry out a review of which investments are appropriate for pension funds? A key criticism made by the Pensions Board was that the investments that had taken place over recent years were high risk investments. That is why so much money was lost from pension funds.

Is the Minister prepared to get investment managers to clarify to their clients the risks that they are taking? Pension policy holders are simply not aware of these risks. Is he prepared to introduce a pension insurance scheme? Will he legislate to ensure companies can no longer walk away from defined benefit schemes that are insolvent? Will he consider extending the PIPS scheme?

Brendan Howlin (Wexford, Labour)
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The Deputy has asked many questions, but she will have another opportunity to speak.

Éamon Ó Cuív (Galway West, Fianna Fail)
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The Deputy has asked many good questions. I would like to see the risk profile lowered and I will be talking to the new chairperson of the Pensions Board this week, as I believe that the pensions issue is very important. The first pension for most people is the contributory old age pension, and the objective is to maintain that at 35% of the average industrial wage. That is the first priority because we must ensure that the most universal pension is protected.

I am a little bit surprised at the question about the risk profile. The Government has been accused of not taking away policies because we ensured that people's investments in banks, bonds and so on were secure. Proposals are being put about by people that we should have put those bonds at risk. This would have meant that even what were considered safe investments would have become risky. The Government policy has been quite clear. We believe that what were considered safe investments by pension funds should remain safe investments, and that this would extend to bonds held in Irish banks, as well as to deposits held in Irish banks. This is fundamental to ensuring that safe investments continue to be considered safe.

The primary responsibility for the oversight of pension funds rest with the Pensions Board, but I will entering into discussions with the board and if there is a need for further changes, I will certainly look at them.

Róisín Shortall (Dublin North West, Labour)
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Given the scale of the deficit, there clearly is a need for action to be taken. Does the Minister intend to provide more staff at the Pensions Board? It recently stated that it does not have the staff and expertise to carry out its functions adequately at the moment. There is a contradiction to this approach, because it also returned a surplus of €400,000 to the Department and reduced the fees to pension schemes by 7.5%. Does the Minister have confidence in the Pensions Board and in its ability to do the task given to it? This crisis has happened on the board's watch. How does he intend to proceed in respect of reform of the board?

Éamon Ó Cuív (Galway West, Fianna Fail)
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Yes I do have confidence in the Pensions Board. We are in the midst of world turmoil and the Government has taken every step to create as much stability as possible in financial institutions here. We have not always had-----

Róisín Shortall (Dublin North West, Labour)
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The board's representatives say that they do not have the capacity to do the job.

Éamon Ó Cuív (Galway West, Fianna Fail)
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The issue of staff is being discussed with the Department of Finance. I will be discussing that issue with the Pensions Board and its new chairman, who was appointed yesterday.

Róisín Shortall (Dublin North West, Labour)
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Why did the board hand back nearly half a million euro?

Éamon Ó Cuív (Galway West, Fianna Fail)
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The board gets its income from a levy, and it had a surplus.

Róisín Shortall (Dublin North West, Labour)
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Why did the board not recruit the experts that were needed?