Eamon Ryan (Dublin South, Green Party)
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Question 12: To ask the Minister for Social and Family Affairs if will make amendments to current legislation and deliver new guidelines in order to protect existing defined benefit pension schemes and to protect workers from sudden changes in pension arrangements. [2723/07]

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. Traditionally, such schemes were organised on a defined benefit basis. However, in recent years defined benefit (DB) provision has been under significant cost 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. The reporting requirements of the accounting standard FRS 17 mean that the asset and liability position of pension schemes is made transparent on the balance sheet of a company and this in turn has also influenced the view employers take of DB provision.

The funding standard under Part IV of the Pensions Act 1990, which applies to funded DB occupational pension schemes, is designed to ensure that, if a funded DB scheme winds up, there are sufficient assets to meet the liabilities at that point in time. The Act requires the trustees of DB schemes to submit to the Pensions Board an Actuarial Funding Certificate (AFC), every 3 years, to certify that the scheme meets the statutory funding standard. Where a scheme does not meet the funding standard a funding proposal, to restore the scheme to full funding, must be submitted to the Pensions Board designed to ensure a return to full funding within 3 years.

In recent years, following a review of the Funding Standard by the Pensions Board in 2004, legislative measures have been introduced to alleviate the funding pressure some schemes are under, due to investment losses and the liability side of pensions. The measures provide that, where a scheme's funding difficulties are due to investment losses or difficulties on the liability side of the fund, a recovery plan may be effected over a longer period of up to 10 years. The Pensions Board, in consultation with key stakeholders, including officials from my Department, is continuing to review the funding standard and the impact of FRS 17 in the context of the overall increasing cost of DB schemes and will report to me shortly in this regard.

I expect that the Green Paper, which will address the issues raised by the Deputy, will be finalised by the end this month and published thereafter. A consultation process will then take place and the Government will publish a framework for future pensions policy on foot of this.

As part of the social partnership agreement Towards 2016, the Pensions Board has been asked to research benefit design options in the occupational pensions area and to examine 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. I understand that work in this regard is well advanced.