Michael McGrath (Cork South Central, Fianna Fail)
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Question 229: To ask the Minister for Social Protection if a decision has been made on the claim for a pension scheme for community employment scheme supervisors and assistant supervisors across the country; if she will explain the rationale behind any decision that has been made; and if she will make a statement on the matter. [37004/11]

Joan Burton (Dublin West, Labour)
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The Labour Court recommended in July 2008 that an agreed pension scheme should be introduced for community employment (CE) scheme supervisors and assistant supervisors, and that such a scheme should be adequately funded by FÁS. Notwithstanding the positions of the Department in rejecting that liability for these costs falls to be met from public funds, this matter has been the subject of discussions between the Department of Public Expenditure and Reform, my Department, and the unions representing CE supervisors. In the event that funding was required from FÁS, the implementation of the claim is not considered sustainable in light of the current and ongoing fiscal environment and the requirement to contain and reduce public expenditure. The costs of the introduction of any scheme are likely to be of the order of €3m per annum with retrospective costs of the order of at least €30m.

The Deputy should also note that FÁS is not the employer of CE supervisors and such employees are not public servants. Neither was FÁS a party to the Labour Court dispute on this matter. The responsibilities of the sponsoring organisations and the individuals concerned must also be recognised when considering pension provision arrangements.

Peter Mathews (Dublin South, Fine Gael)
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Question 230: To ask the Minister for Social Protection if she has plans (details supplied) to amend the Pensions Act; and if she will make a statement on the matter. [37282/11]

Joan Burton (Dublin West, Labour)
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The Pensions Act sets out the order in which the assets of a pension scheme must be applied in the event of a scheme wind-up. The statutory order of priority is of no consequence where a scheme winds up with sufficient assets to meet all of its liabilities. In a wind–up situation, all benefits to pensioners except provision for post retirement increases are given the highest priority after wind-up expenses and additional voluntary contributions made by individuals. Any remaining assets are then divided according to the accrued liabilities amongst active and deferred scheme members. However, if a scheme is under-funded, the remaining assets may not be sufficient to meet the liabilities of the active and deferred members. In some cases they may receive little or nothing after the commitments to existing pensioners have been satisfied. In this context a scheme member who is close to retirement age could have their expected benefits significantly reduced. The change being brought forward by Government is designed to provide for a more equitable distribution of scheme assets where an under-funded pension scheme winds-up.

Subject to further detailed drafting considerations, the proposed amendment to the Pensions Act will:

- Continue to prioritise existing pensions and ensure that they receive their benefits, but only up to a level of €30,000, or 75% of expected benefits whichever is the lower.

- Assets in the scheme would then be distributed among active and deferred members to the same limits.

- Pensioners would then get priority in the distribution of the remaining assets before any further assets are distributed to active and deferred scheme members.

All schemes are different and applying these priorities will have different impacts. In the case of most pension schemes, where pensions are integrated with social welfare pensions, the effect of a percentage reduction in pensioner benefits will not have the effect of reducing their total remuneration by that same percentage. For example, in a situation where the State contributory pension is worth €12,000 and a pensioner receives €15,000 from the occupational pension, the effect of a 25% reduction of the occupational pension would be as follows:

Full pension : €12,000 + €15,000 = €27,000

75% pension : €12,000 + €11,250 = €23,250 (86% of full pension)

In this regard, capping pensions at 75% of benefits does not translate into a 25% reduction in pension payable, given the effect of integration of the State pension

The approach that will be adopted will ensure that in the event of a scheme winding up in deficit, the current balance will be tilted so that active and deferred members will receive a greater proportion of their expected benefit that they would otherwise, while ensuring that pensioners are still protected.