Michael D Higgins (Galway West, Labour)
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Question 126: To ask the Minister for Social and Family Affairs her views on the claims from the pension industry that the regulatory regime is putting pressure on the sustainability of defined benefit pension schemes. [39553/08]

Seán Sherlock (Cork East, Labour)
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Question 159: To ask the Minister for Social and Family Affairs the assessment she has undertaken of the risk to defined benefit pension schemes of the actuarial funding standard; the discussions she has had with affected employers and employees; and if she will make a statement on the matter. [39558/08]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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I propose to take Questions Nos. 126 and 159 together.

The Pensions Act provides for a Funding Standard which must be met on an ongoing basis by all defined benefit pension schemes. The Funding Standard requires that schemes maintain sufficient assets to enable them to discharge accrued liabilities in the event of a scheme winding up. Where schemes do not satisfy the Funding Standard the sponsors/trustees must submit a funding proposal to the Pensions Board to restore full funding.

In 2007, 81% of defined benefit schemes reporting to the Pensions Board passed the Funding Standard, with most of the balance having a funding proposal in place to restore full funding.

I have previously acknowledged that pension funds will have suffered losses in the last year or so while factors such as increased life expectancy have also led to increased liabilities. Accordingly, it is to be expected that the number of schemes failing the funding standard will increase, but the extent of the problem will not be fully apparent until schemes carry out end of scheme year actuarial assessments and report the results to the Pensions Board.

The overall operation of the Funding Standard is discussed in the Green Paper on pensions and any changes proposed will be announced in the context of the framework for pensions which the Government has indicated it will announce by the end of the year.

These will also take account of the wide range of submissions received from both representative organisations and members of the public made during the formal consultation process. My officials have met with a number of groups to explore their submissions in more detail. Unfortunately, while everyone acknowledges the need for pension reform, no consensus has emerged from the consultation process on the nature of the reforms required.

There is no doubt that the current situation is causing difficulties for defined benefit pension schemes and my Department is working with the Pensions Board and representative organisations to find ways to ease the pressure on schemes. Indeed, given current market conditions and the difficulties these pose for schemes in trying to devise their funding plans, I recently asked the Pensions Board to allow additional time for the preparation of funding proposals, as a temporary measure.

This should provide schemes with sufficient time to deal with the issues in an orderly manner. In addition to this, the Pensions Board are continuing to consider the issues involved for schemes who are experiencing difficulties in returning to a fully-funded position.

However, in considering any amendments to the funding standard there is a very difficult balance to be struck between the long-term nature of pension savings and the need to ensure, as far as we can, the short-term security of the benefits already accrued by employees in a scheme.