Richard Bruton (Dublin North Central, Fine Gael)
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Question 86: To ask the Minister for Social and Family Affairs if she has assessed the impact of stock market losses on the robustness of pension provision; and if there are implications for public policy. [15682/08]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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The Funding Standard provided for in the Pensions Act 1990, measures the solvency of defined benefit pension schemes. Generally speaking, this requires that pension schemes have sufficient assets to discharge their liabilities in the event that the scheme is wound up. Schemes are required to carry out a full actuarial assessment of the funding position every three years and an interim assessment of the position must be included in the annual report of a scheme.

Where a scheme does not meet the funding standard the trustees are required to put in place a funding proposal to enable the scheme to meet the standard within three years. The Pensions Board can extend this period to ten years in certain circumstances including where the funding position of a scheme has been adversely affected by market difficulties.

Up to the end of March this year 1,343 of the 1,416 Defined Benefit pension schemes registered with the Pensions Board submitted funding certificates and 77% of these schemes satisfied the Funding Standard.

In many cases the assessments, on which the funding certificates are based, pre-date the recent market difficulties and so it will be sometime yet before it becomes apparent what impact these will have on individual pension schemes.

Pensions are long-term investments and changes in market performance over the short-term must be viewed with caution for that reason. Private pensions performed positively over a number of years before the recent change in fortunes. That said, there is no doubt that difficulties in the markets impact on pensions in a number of ways. Firstly, as employers bear the investment risk for the schemes, it puts pressure on defined benefit provision. The cost to employers of maintaining defined benefit schemes has increased significantly in recent years and any period of sustained market losses is a cause for concern as they will be required to make up any deficits which may arise in scheme funding.

Secondly, as regards defined contribution schemes, losses can impact on the value of the fund and the level of pension it can provide. This has serious implications for members who carry the investment risk. Stock market losses may affect confidence in the system at a time when the Government is encouraging people to make early provision for their retirement.

As the House is aware the Government published a Green Paper on Pensions in October 2007. The associated consultation period on the paper will draw to a close at the end of May. The Government is committed to developing a framework for future policy on all aspects of pensions with a view to putting in place a sustainable pension system which people can be confident will deliver an adequate income in retirement. This framework will be developed by end 2008.