Billy Timmins (Wicklow, Fine Gael)
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Question 75: To ask the Minister for Social Protection the number of defined benefit pension schemes which fail the minimum funding standard; the number of persons affected by same. [39978/10]

Róisín Shortall (Dublin North West, Labour)
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Question 81: To ask the Minister for Social Protection his response to the sovereign annuity proposal made to his Department by the Irish Association of Pension Funds and the Society of Actuaries. [40041/10]

Éamon Ó Cuív (Galway West, Fianna Fail)
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I propose to take Questions Nos. 75 and 81 together.

Under the Pensions Act, defined benefit pension schemes must meet a minimum Funding Standard which requires that schemes maintain sufficient assets to enable them discharge their accrued liabilities in the event of the 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, although as part of measures announced by the Government, the Pensions Board can now allow a scheme ten years or more to meet the standard in certain circumstances.

At the end of 2009, there were 254,325 members in 1,192 defined benefit schemes subject to the funding standard. It was estimated at that time that in excess of 75% of these schemes were in deficit. In a recent survey undertaken by the Pensions Board 70% of schemes reported to be in deficit. However, the extent of the level of under-funding will not be fully apparent until all schemes carry out their next actuarial assessment and report the results to the Pensions Board.

The Government is very conscious of the pressures on both sponsoring employers and pension scheme trustees, arising from the very significant losses incurred by pension funds during 2007 and 2008. While schemes recovered some of their losses since then, we are anxious to ensure, in so far as we can, that those involved have sufficient time and space to fully assess the implications for their schemes and the remedial action they can take.

Indeed, this was the thinking behind the implementation of a number of measures introduced to ease the pressures being felt by many pension funds. Those measures included the granting of extra time for schemes to formulate funding proposals and allowing longer periods for recovery plans. In addition, the Social Welfare and Pensions Act 2009 amended the Pensions Act to allow for the restructuring of underfunded schemes; to ensure a more equitable distribution of assets in the event of the wind-up of a defined benefit scheme and to strengthen the powers of the Pensions Board in ensuring that pension contributions deducted from wages and salaries are remitted by employers to scheme trustees. This Act also introduced the legislative provisions to enable the Minister for Finance to establish the Pensions Insolvency Payments Scheme (PIPS) to reduce the cost of purchasing pension payments for trustees of pension schemes where the employer has become insolvent. The PIPS came into effect in February 2010 and will ensure a more equitable distribution of assets following the wind up of underfunded pension schemes.

In March of this year the Government launched the National Pensions Framework. As the Deputy is aware, the framework sets out the Government's intention for a radical and wide-scale reform of the Irish pension system. I announced last month that work on the new defined benefit pension model, as outlined in this Framework, would be expedited. My Department will aim to introduce this new model, following legislative changes on 1 July 2011. Following this announcement, the deadline of the 30th November for the submission of funding proposal to the Pension Board was deferred. It is anticipated that the deferral of this deadline will allow scheme time to take account of reforms to the defined benefit model in the preparation of funding proposals for submission to the Pensions Board by a date which will be announced by the Pensions Board.

As you are aware, the Government has established an implementation group charged with bringing forward proposals for the introduction of measures contained in the National Pensions Framework. As part of its deliberations, the proposal for a sovereign annuity mentioned by Deputy Shortall is also being given serious consideration. It must be stressed that the issue is by no means straight-forward and the benefits and risks involved for all stakeholders are being fully assessed.