Joan Burton (Dublin West, Labour)
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Question 260: To ask the Minister for Social and Family Affairs if she is taking steps to ensure that private sector defined benefit pension schemes can meet their funding requirements; if she proposes to make changes to the regulations governing such funds; and if she will make a statement on the matter. [47342/08]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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The Pensions Act provides for a minimum Funding Standard which defined benefit pension schemes must meet on an ongoing basis. Generally speaking, the 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 within three years. The Pensions Board can allow a scheme up to ten years to meet the standard in certain circumstances.

In 2007, 81% of defined benefit schemes reporting to the Pensions Board passed the Funding Standard. Most of those schemes failing the test had a funding proposal in place. It is expected that the number of schemes failing the funding standard will increase significantly in the coming year. However, the extent of the problem will not be fully apparent until schemes carry out end of year actuarial assessments and report the results to the Pensions Board as required under the Pensions Act.

In recognition of the current market difficulties and the difficult decisions that pension schemes will face, the Government has put in place short-term measures to ease the pressure on schemes. It has been agreed with the Pensions Board that an additional six months will be allowed for trustees to prepare funding proposals.

This will mean that schemes will have 18 months to review the situation with sponsoring employers and to formulate proposals for recovery.

The Government is working with the Pensions Board, representative organisations and the social partners to find ways to ease the pressure on schemes by striking a balance between the long-term nature of pension savings and the need to ensure short-term security of accrued benefits. As outlined, it has already taken some short-term measures in this area. The long-term response to the situation is being considered in the context of the Green Paper on Pensions and any changes proposed will be announced in the context of the overall framework for pensions which the Government will announce in the near future.