David Stanton (Cork East, Fine Gael)
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Question 1050: To ask the Minister for Social and Family Affairs his views on European Court Opinion C-278/05 of 13 July 2006; the implications of same; and if he will make a statement on the matter. [29962/06]

David Stanton (Cork East, Fine Gael)
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Question 1051: To ask the Minister for Social and Family Affairs the involvement of the Government in the proceedings relating to European Court Opinion Case C-278/05; and if he will make a statement on the matter. [29963/06]

Séamus Brennan (Dublin South, Fianna Fail)
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I propose to take Questions Nos. 1050 and 1051 together.

The case to which the Deputy refers relates to Directive 80/987/EEC which provides for the protection of employees in the event of the insolvency of their employer. The High Court in the U.K. referred a case to the European Court of Justice for a preliminary ruling on whether Article 8 of this Directive requires "Member States to ensure, by whatever means necessary, that employees' accrued rights under supplementary company or inter-company final salary pension schemes are fully funded by Member States in the event that the employees' private employer becomes insolvent and the assets are insufficient to fund those benefits".

Article 8 of the Directive requires that "Member States shall ensure that the necessary measures are taken to protect the interests of employees and of persons having already left the employer's undertaking or business at the date of the employer's insolvency in respect of the rights conferring immediate or prospective entitlement to old-age benefits, including survivors' benefits, under supplementary company or inter-company pension schemes outside the national statutory social security schemes." However, the Directive elsewhere enables Member States to limit the liability of the guarantee institutions.

In Ireland, Article 8 of the Directive was implemented by Section 7 of the Protection of Employees (Employers' Insolvency) Act 1984. This provides that in the event of an employer's insolvency, any contributions deducted from any employee in the 12 months prior to insolvency and which remain unpaid, and any contributions due to be paid by the employer into the scheme in the 12 months prior to the insolvency, unless a lesser amount would discharge the liabilities, may be made from the Social Insurance Fund into the occupational pension scheme. In addition to the measures taken to implement this Directive, existing provisions are in place under the Pensions Act 1990 to protect members' benefits under occupational pension schemes.

Part IV of the Pensions Act 1990 sets out a minimum funding standard for defined benefit pension schemes. This is a wind-up standard, based on the benefits a scheme is obliged to provide should the scheme be wound up. In addition, having sufficient assets to meet the liabilities of the scheme is now also a requirement under EU Directive 2003/41/EC, which my Department implemented in September 2005.

The issues arising from this particular case relate to two Government Departments, namely, the Department of Enterprise, Trade and Employment, which has responsibility for the Insolvency Payments Scheme and which, under the Protection of Employees (Employers' Insolvency) Act 1984, administers the implementation of all of the provisions of the Directive, and my Department, which has responsibility for pension issues and the Social Insurance Fund, from which insolvency payments under the Insolvency Payments Scheme are made.

Given the similarity in pension systems it is no surprise to note that the UK implemented Article 8 of the Directive in much the same manner as Ireland. A report from the Commission on 15 June 1995 analysing national laws transposing the Directive found that in the case of Ireland, there was no cause for objection.

In the context of this case, Member States were invited by the European Court to submit statements of case or written observations to the Court of Justice by the 25th October 2005. Arising from this invitation, I and my colleague, the Minister for Enterprise, Trade and Employment accordingly arranged for the Attorney General to submit observations. The observations were submitted having regard to the potential implications for Ireland of this case and in order to ensure that the Irish position was fully presented.

An oral hearing in this case was held on June 1st at which Ireland was represented. Following the hearing, the Advocate General delivered her opinion on the 13th July 2006 in advance of the final ruling of the European Court of Justice. While the Advocate General considers that the Directive in principle requires full protection of employees' interests with regard to prospective rights to pension benefits, she agrees with the UK Government and Ireland in their respective submissions that the Member States cannot directly incur liability under the Directive in respect of shortfalls in pension benefits that have not been adequately secured. However, it would be premature to consider any possible implications of this case until the final ruling by the European Court of Justice, which is not expected until the end of 2006.