Bernard Allen (Cork North Central, Fine Gael)
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Question 57: To ask the Minister for Finance his intentions in relation to funds held by the pension trustees of certain non-commercial State sponsored bodies in view of his letter proposing a full guarantee of pensions by the State and a transfer of funds; the way the transfer will be accounted for in terms of general Government borrowing in 2009; and if he will make a statement on the matter. [31450/08]

Kathleen Lynch (Cork North Central, Labour)
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Question 65: To ask the Minister for Finance his views on the proposal to absorb the pension fund assets and liabilities of public bodies into the Exchequer accounts; if a full assessment of these assets and potential liabilities has been undertaken; and if he will make a statement on the matter. [31318/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 57 and 65 together.

Discussions are in train with the trustees/administrators of the funded pension schemes of the five older universities and certain non-commercial semi-State bodies (SSBs), which have funded pension schemes, with a view to providing consistency and clarity for the future in terms of meeting the liabilities of the schemes.

This follows consideration some time ago of the pension difficulties facing those universities by a working group under the Higher Education Authority, which recommended such discussions. The background to this is that all funded schemes must now meet minimum funding standards under EU law unless they are covered by the State. This has presented problems for the universities and non-commercial SSBs with funded pension schemes where the State ultimately carries the liability but where this is not clear enough to warrant exemption under EU law. In that context, and provided all the schemes concerned agree, it is proposed that the assets of those schemes would be transferred to the State along with the liabilities which would then be met, effectively, by the State on a pay as you go basis in the future. The terms and conditions of the schemes would be no better nor worse than the members would be entitled to anyway. If agreement is reached, legislation to give effect to all this would be required.

I am informed that the estimated value of the assets of all of the funds in question at end-2007 was in the region of 2.3 billion euro, but this will have changed in the interim and is subject to market fluctuations. The liabilities in relation to these schemes are the defined benefits to which the members are entitled and for which the State is already, effectively, responsible. Under the proposal, these will be met by the State on a pay as you go basis, in line with the approach taken in relation to public service pensions generally.

As regards the impact on the public finances, under current Eurostat rules, the transfer of the assets would impact positively on the General Government Balance (GGB) when received. This initial revenue would be offset in the future by the payment of pension benefits which would be recorded as Government expenditure at the time of payment. The effect on the GGB when the assets are received is clearly identified as being once off in the National accounts and the underlying GGB is, therefore, still unaffected.