Breeda Moynihan-Cronin (Kerry South, Labour)
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Question 85: To ask the Minister for Social and Family Affairs if his attention has been drawn to the recent report produced by a company (details supplied) which shows that the ten biggest Irish public limited companies have a combined pension deficit of more than €3 billion; if he is satisfied that sufficient procedures are in place to protect the pension entitlements of all workers; and if he will make a statement on the matter. [11843/05]

Séamus Brennan (Dublin South, Fianna Fail)
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The minimum funding standard, which applies to defined benefit, DB, occupational pension schemes under the Pensions Act 1990, is a discontinuance or wind-up standard. The standard is designed to ensure that, if a funded DB scheme winds up, there are sufficient assets available to meet the liabilities of the scheme at that point in time. In general, schemes must fully assess their position every three and a half years and those that do not satisfy the standard have three and a half years to put in place the necessary funding arrangements to restore full funding though, as I will outline, some flexibility has been introduced in this regard.

In common with the companies referred to in the recent report, many schemes are at present having difficulty meeting the standard. This is as a result of investment losses in the three years after 2000 and increasing liabilities through a combination of improved longevity, increased earnings and low interest rates.

In 2003, pending a full review of the funding standard by the Pensions Board, my predecessor introduced short-term measures designed to alleviate the funding difficulties which many schemes were experiencing as a result of investment losses. The measures allowed the Pensions Board to extend the period during which schemes have to restore full funding on a case by case basis up to ten years. These were very successful in easing the pressure on schemes and when the Pensions Board review was finalised late last year it recommended, among other things, retention of these provisions. It also recommended that the grounds on which extensions can be allowed should be expanded to encompass difficulties arising from increased liabilities. I accepted these recommendations and the basic provisions required to implement them were included in the recent Social Welfare and Pensions Act 2005. Detailed requirements will be specified in regulations to be made in the coming months.

In ensuring the continuation of defined benefit schemes we need to strike a reasonable balance between the interests of members and the sponsoring employers who must fund the deficits which have emerged in many schemes. In this regard, we need to keep in mind that while pensions are long-term savings and investment products we need a shorter term measure of the value of the pensions from a member perspective. The measures introduced achieve this balance and will help to ensure the continuation of good defined benefit pensions provision. I will keep the situation under review in consultation with the Pensions Board.