Finian McGrath (Dublin North Central, Independent)
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Question 447: To ask the Minister for Social and Family Affairs the action he will take regarding employers who want to downgrade pension schemes; and if he will make a statement on the matter. [38470/06]

Séamus Brennan (Dublin South, Fianna Fail)
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The provision of occupational pensions in Ireland is on a voluntary basis and depends on the willingness of employers to contribute to and maintain schemes for their employees.

Defined benefit provision, in recent years, has been under pressure because of volatility in the stock markets and increasing liabilities arising from demographic pressures, low interest rates, increasing wage costs that translate into higher benefits and regulatory requirements. These factors are adding greatly to the cost of defined benefit schemes. New accounting standards, which make pensions liabilities transparent on a company's balance sheet, are also contributing to the pressures under which defined benefit schemes are now operating. As a result, some employers are no longer willing to maintain such schemes.

For a number of years, a drift towards defined contribution provision has been apparent with little or no new defined benefit schemes being opened. We have also seen a number of existing defined benefit schemes closing to new members, even in cases where firms are highly profitable. This is, in my view, a regrettable development. However, at this stage, further regulation would only serve to add to the pressures on defined benefit provision and could be counter productive.

The Government has committed itself to producing a Green Paper on pensions as part of the social partnership agreement Towards 2016. The Green Paper will outline the major policy choices, the challenges in this area and the views of the social partners.

Also, as part of this agreement, the Pensions Board has been asked to research benefit design options in the occupational pensions area and to examine current design issues in both defined benefit and defined contribution arrangements, with a view to producing guidance as to designs which encompass the positive elements of each arrangement while adjusting the costs and risks to the parties involved.

It is my intention to produce the Green Paper by the end of March next year. A consultation process will follow this and the Government will respond to these consultations by developing a framework for comprehensively addressing the pensions agenda over the long term.