Billy Timmins (Wicklow, Fine Gael)
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Question 49: To ask the Minister for Social Protection the number of defined benefit pension schemes which fail the minimum funding standard; the number of persons affected by this; and if he will make a statement on the matter. [39269/10]

Éamon Ó Cuív (Galway West, 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 their accrued liabilities in the event of the scheme winding up. Where schemes do not satisfy the funding standard, the sponsors or trustees must submit a funding proposal to the Pensions Board to restore full funding within a three-year period.

At the end of 2009, there were 254,325 members in 1,192 defined benefit schemes subject to the funding standard. It was estimated at that time that in excess of 75% of these schemes were in deficit. A recent survey undertaken by the Pensions Board found that 70% of schemes were reported to be in deficit. However, the 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 conscious of the pressures on both sponsoring employers and pension scheme trustees, arising from the very significant losses incurred by pension funds during 2007 and 2008. While schemes recovered some of their losses in the past year or so, I am anxious to ensure, in so far as possible, that pension scheme trustees and employers have sufficient time and space to assess fully the implications for their schemes and the remedial action they can take. This was the thinking behind the implementation of a number of temporary measures in December 2008 to ease the funding pressures on pension schemes.

In addition, the Pensions Act was amended by Social Welfare and Pensions Act 2009 to provide for a number of measures which would support the trustees and employers in responding to the significant challenges they encountered following the down turn in the financial markets. In March this year, the Government launched the national pensions framework. It sets out the our intention for a radical and wide-scale reform of the Irish pension system. I announced last month that work on the new defined benefit pension model, as outlined in this framework, would be expedited. My Department will aim to introduce this new model following legislative changes on 1 July 2011.

Following this announcement, the deadline of 30 November for the submission of funding proposal to the Pensions Board was deferred. It is anticipated that the deferral of this deadline will allow schemes time to take account of reforms to the defined benefit model in the preparation of funding proposals for submission to the Pensions Board by a date which will be announced by the board.

Billy Timmins (Wicklow, Fine Gael)
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Does the Minister agree that the ineptitude of the Government is best reflected in its failure to deal with the issue of the pensions time bomb for more than a decade? Does he also agree that it is disgraceful that 200,000 people who have paid into defined benefit schemes might not have their expectations met and that nothing has been done by the Government in the interim other than to defer dates? When will there will be positive results? When will the new defined benefit scheme be established? Everything appears to have been put on the long finger. What proposals has the Minister to deal with the shortfall? What message can he send to the 200,000 people who will not receive the pensions they expected?

Éamon Ó Cuív (Galway West, Fianna Fail)
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As I announced recently, it is our intention to bring forward a new defined benefit model, the idea of which is to have core benefits and then to have top-up benefits, depending on the market. It will not be mandatory for schemes that are properly funded to transfer to this scheme but it will be available for schemes with funding difficulties. There is a tight timeframe for introducing all the necessary legislation by 1 July 2011 and, therefore, the Deputy cannot say we are dragging our heels on this. Legislative changes will be required and that is our intention.

The Government also published a comprehensive pensions framework last February and I reject the contention that it has not been active on this issue. The collapse in the value of equities on markets worldwide has had a devastating effect on the pensions industry and while some of the losses have been made back this year, they do not compensate for the losses of previous years.

Billy Timmins (Wicklow, Fine Gael)
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I disagree with the Minister. The Government has dragged its heels on this issue for more than a decade. With regard to the pensions framework, when can we expect the implementation group to be established?

The Minister referred to returns on equity investments being bad over the past number of years. Returns were not bad over the past year. However, the National Pensions Reserve Fund only achieved a return of 2.5% on an investment of €7 billion in 2009. The fund was set up to protect pensions into the future but every policy from every political party proposes to raid the fund. At this stage it has probably been raided ten times over. What is the Minister's view on the raiding of the fund? Has he considered other measures to deal with the pensions shortfall such as increasing the pension age or reducing pensions? Has he thought of anything outside the box?

Éamon Ó Cuív (Galway West, Fianna Fail)
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An implementation group has been set up and four sub-committees are working on various aspects of the framework. I have expedited the work on the defined benefit scheme, which is important, because I agree with the Deputy that this is an urgent issue. I am dealing with it as an urgent issue and will continue to do so.

Róisín Shortall (Dublin North West, Labour)
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The Minister has deferred it. He has not expedited anything.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I have. I said I will bring forward new proposals, which include legislation, and I will have them implemented by 1 July 2011. I have expedited the process because of its urgency. What happened subsequently was the Pensions Board decided to defer the date to give schemes the opportunity to avail of the new scheme. That makes a great deal of common sense.

The National Pensions Reserve Fund is a matter for the Minister for Finance. It does not relate to this discussion because the fund was established specifically to cover public service pensions.