Richard Bruton (Dublin North Central, Fine Gael)
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Question 336: To ask the Minister for Social and Family Affairs if his attention has been drawn to the fact that under the rules of portability of pensions, employers are only obliged to index entitlements in line with consumer prices up to a maximum of four percent; and his views on whether this should be reviewed now that inflation is about to push through that barrier. [19342/06]

Séamus Brennan (Dublin South, Fianna Fail)
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Part III of the Pensions Act 1990 requires occupational pension schemes to provide preserved benefit, calculated in accordance with the normal scheme rules, for members who leave relevant employment after completing at least two years service in the pension scheme.

Part III also provides for the revaluation of such preserved defined benefits from the date of termination of employment to the date of normal retirement. The rate of revaluation, which is set out in regulations each year, is the percentage increase in the general level of consumer prices up to a maximum of 4%. The annual Consumer Price Index increase for the year 2005 was 2.5% and as such was the revaluation percentage for that year.

The current funding standard requirements under Part IV of the Pensions Act are designed to ensure that, if a defined benefit scheme winds up, there are sufficient assets to meet the liabilities of the scheme at that point in time. Any proposed increase in the maximum revaluation percentage from the current 4%, would therefore have to be examined in the context of the resulting increase in the funding requirements that would be placed on defined benefit pension schemes. However, current forecasts from the ESRI and from the Central Bank & Financial Services Authority of Ireland are for a CPI rate of around 3% or less in 2006 and 2007.

I am anxious to ensure that a reasonable balance is struck between the protection of the interests of all scheme members and the interests of employers who sponsor and contribute to schemes. I believe that the current provisions in relation to the revaluation of preserved benefits achieve that balance. However I will continue to keep this situation under review.