Richard Bruton (Dublin North Central, Fine Gael)
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Question 135: To ask the Minister for Social and Family Affairs her views on the adequacy of provision for pension liabilities in the private sector; and the policy options open to her. [38747/08]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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Private sector pensions include occupational pension schemes; either defined benefit or defined contribution schemes, and personal pensions such as personal retirement savings accounts (PRSAs) and retired annuity contracts (RACs).

Defined benefit pension schemes are required to hold sufficient assets to discharge their liabilities in the event that the scheme is wound up. These reserves are defined by the minimum Funding Standard provided for in the Pensions Act 1990. To ensure that these funds are maintained on an ongoing basis, each scheme is required to carry out a full actuarial assessment of its funding position every three years and an interim assessment of its financial position must be included in the scheme annual report.

I am aware that pension funds will have been affected by the recent economic downturn. Institutions where the downturn results in a defined benefit scheme failing to meet the funding standard are required to put in place a funding proposal that will enable the scheme to recover and meet the standard within three years. The Pensions Board has the authority to extend this recovery period to ten years in certain circumstances and I know that the Board is working closely with all scheme administrators in this regard.

Although still benefiting from employer contributions towards their pensions, members of defined contribution schemes bear the investment risks associated with their scheme. Accordingly, the value of their fund can decrease when markets fall which will impact on the value of the pension a person can purchase on retirement. As members near retirement, many administrators switch their assets to more conservative investments to ensure they are shielded from the volatility of the market.

These investment risks also apply to those with personal pensions such as PRSAs and RACs. It is important to remember that pensions are a long term investment and many people with pensions will have an opportunity to reclaim recent losses and benefit from any future market gains.

Following on from the launch of the Green Paper on Pensions and the conclusion of the formal consultation process, discussions are now ongoing in relation to possible reforms to strengthen both public and private sector pension provision.

Our objective is to ensure that we have in place a pensions system which will deliver an adequate retirement income for all while being able to withstand the cost pressures which will arise in the future, as the composition of our population changes, and the balance between those at work and those who are retired shifts dramatically. In deciding on reforms we must be aware that good pension provision entails significant costs for society as a whole, whether it is delivered through the State system or by personal contributions to private arrangements.

There is no doubt that the Government is faced with difficult decisions but my fellow Ministers and I are determined to bring this process to a conclusion by announcing a framework to address the pensions agenda for the longer-term.