Joan Burton (Dublin West, Labour)

I do not propose to accept amendments Nos. 9 and 10. As supplementary pension schemes are usually established under irrevocable trust the assets of the scheme are legally separate from the assets of the employer. Under trust law, trustees of occupational pension schemes are required to act in the best interests of scheme members and have the principal responsibility of ensuring that the entitlements of the members are adequately protected. In this context, the trustees have a responsibility to ensure that any investment made by the pension scheme is prudent, will generate a reasonable financial return and is in the best interests of scheme members. Senator Cullinane has indicated that he is aware of that requirement of trust law.

The pensions Act was amended in 2010 to facilitate pension scheme access to sovereign annuities and the underlying bonds referenced by these annuities. Much work has been done by the pensions regulator and the NTMA on ensuring the development of an Irish based sovereign bond - subject obviously to market yields - of a sufficient duration to provide matching assets for pension schemes. It is anticipated that the financial sector will develop sovereign annuities referencing these sovereign bonds. The reforms which are before us in the Act are part of the structure that will enable this to happen. In 2008, owing to turmoil in the markets the previous Government suspended the pension funding standard on a temporary basis. However, this "temporary basis" turned out to be four years, and counting.

In terms of the situation for the 1,200 plus defined benefit schemes, the restoration of the funding standard is a very important step - a difficult one for many of the schemes - in terms of restructuring, consolidating and protecting the benefits for members of the schemes. We are also introducing in this legislation the concept over a long period of time of a risk reserve which again will help to build up the security of pension funds. Pension funds have taken a hammering given the turmoil on the markets, which is difficult for the 222,000 plus members of defined benefit schemes.

Senators may be interested to hear that according to an Irish Association of Pension Funds survey - these figures are often given - the total assets in pension schemes at the end of 2009 was approximately €72 billion. There is a great deal of money invested, of which defined benefits account for approximately €48 billion and defined contribution schemes account for approximately €24 billion. One of the features of the defined benefit schemes, for reasons alluded to by Senator Mooney, is that their investment in equities is on the higher side, approximately 64%. These are the figures for end 2009. Bonds and cash account for approximately 28%. In terms of defined contributions, equities account for approximately 58%.