Noel Ahern (Dublin North West, Fianna Fail)

I am not familiar with the company to which the Senator referred, but it seems a very serious situation. Occupational pension arrangements are an important part of our overall pensions system. As the Senator will be aware, the Government is encouraging workers to participate in occupational and private pension schemes as they can make an important contribution in ensuring that people maintain their pre-retirement standard of living. Currently just over 50% of workers have a private or occupational pension and the aim is to increase this to about 70%. If we are to achieve this target it is important that people have confidence in the ability of their scheme to deliver the promised benefits when they retire. In this regard, under the Pensions Act, defined benefit schemes are required to comply with a funding standard which is designed to ensure that available assets are sufficient to discharge liabilities in the event of a scheme winding up. If a scheme is unable to meet the funding standard, a funding proposal, designed to ensure the scheme can meet its liabilities, must be submitted to the Pensions Board which is the regulatory authority for occupational pensions.

Recent years have been very difficult for pension funds with many experiencing losses arising from falls in equity markets worldwide. The result is that a significant number of schemes are experiencing difficulty meeting the requirements of the funding standard. In 2003, following proposals from the Pensions Board, the Minister for Social and Family Affairs, Deputy Coughlan, introduced legislation which gave the board the discretion to modify the requirements of the funding standard on a case by case basis provided it was in the interests of the members. At the same time the Minister asked the board to carry out a full review of the appropriateness and effectiveness of the current funding standard.

In considering what changes can be made to the existing arrangements, it should be remembered that occupational pensions are provided on a voluntary basis by employers, often at a considerable cost. Indeed, some employers have made very significant cash injections into the pension funds of their employees in order to make good the losses which have been incurred in recent years.

As I already indicated, the pensions board is reviewing the funding standard which currently applies to pension schemes. In deciding on any proposals, it will be important to strike a balance between the interests of scheme members and those of employers who provide pension schemes. In other countries, and in the UK in particular, we have seen a large scale closure of defined benefit pension schemes. Thankfully, the experience here has been very different and employers appear to be willing to maintain this very valuable provision for their employees. An important consideration in deciding on further regulation in this area will be the impact any changes might have on the willingness of sponsoring employers to maintain their pension schemes.

The Pensions Board is currently finalising a consultation document seeking views on a range of changes to the funding standard which could be considered. That document will also seek views on several other measures which might be considered, including the setting up of a pension protection fund. The consultation document will be issued shortly and the views received will be considered fully by the Pensions Board, which includes representatives of the pensions industry, social partners, consumers, pensioners and the Department. If, following full consultation and examination, changes are considered appropriate, the Minister intends to bring forward proposals for the necessary changes in pensions legislation.

As I said, I am not aware of the company about which the Senator is speaking, but there may have been indications of a possible problem based on experience abroad. It would look like that procedure if it were followed through. Since the document is for consultation, it is open for everyone — certainly everyone in the sector — to make submissions on it. One hopes, for the sake of those on whose behalf the Senator is raising the query, that the programme under way might lead to something that will allow protection to be carried into the future. If the Senator gives me the name of the company privately, I will pass it on to the Minister.