Joan Burton (Dublin West, Labour)

The matters raised by Senator Cullinane are very important but as they are before the courts at present it is not appropriate for me to comment on them.

With regard to the pension matters dealt with here, as I stated in my opening comments on Second Stage the previous Government suspended the funding standard in 2008. With regard to defined benefit schemes, consistent and serial expressions of hope have been expressed that the market will turn around. Unfortunately for the hundreds of thousands of people contributing to these very important schemes the turmoil in the markets has meant this has not happened. I have spent much time examining the difficulties with defined benefit schemes because they are so important. As the Senators pointed out, there are three categories of interested parties, namely, those who have retired and are beneficiaries of the schemes; those who are deferred members because they have moved to a different employment and their entitlement will not arise until they come to pension age; and current contributory members. As was outlined, people are fearful of their ultimate entitlement. As I stated, most of the schemes are now closed to new entrants therefore their profiles are inevitably ageing. The Bill deals with a series of amendments which I felt were important to introduce. With regard to the issue Senator O'Brien raised, the matter is being examined in great detail by the Attorney General's office because it involves serious issues with regard to various property rights.

There was an option to postpone all of these changes until everything was ready but to me it seemed too long a timeframe. Therefore, I decided at least to address these particular changes which would give more certainty to trustees. The Department has done much work with the NTMA, as has the pensions regulator, to provide for the development of an annuity product suitable to the Irish situation. At present the annuity products are generally German bonds and their cost is very high while, because of the situation with regard to interest rates, their return is very low. The NTMA has been involved in detailed discussions to prepare a product. I understand a number of providers may be interested. Again, much depends on settlement in the markets to a reasonable level of stability. It is a bit like the treaty; it is all about stability as opposed to turmoil.

With regard to people accessing their pension funds I will not give the Senator a detailed answer now except to say significant tax issues arise because many pension funds involve significant tax considerations on entry, including tax breaks, and a condition of many products involves tax issues on exit. This has been more of an issue for the Department of Finance and is seen as such because of the related tax issues.