Pearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance the reason the group pension deficit at Allied Irish Bank increased from €763 million at the end of December 2011 to €1,457 million at 30 June 2012. [52879/12]

Pearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance the reason the group pension liabilities at Allied Irish Bank increased from €4,562 million at the end of December 2011 to €5,466 million at 30 June 2012; if this increase is due solely to 2,500 redundancies sought; and if he will confirm that the liabilities have increased by an average of €361,600 for each of the 2,500 redundancies. [52880/12]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 241 and 242 together.

I am informed that AIB sets out information on its pension deficit in the Bank’s annual and half yearly reports and accounts. The following is a summary of that disclosure.

As set out on Note 11 - Retirement Benefits - to the condensed consolidated interim financial statements of AIB Group at 30 June 2012, AIB Group‘s pension deficit is calculated under International Accounting Standard 19 for the purpose of financial reporting. At 30 June 2012 the deficit stood at €1,457 million compared to €763 million as at 31 December 2011. The increase of €694 million in the net deficit arose following the increase in retirement benefit liabilities by €904 million to €5,466 million while the fair value of schemes assets increased by €210 million to €4,009 million.

I understand that the defined benefit pension liabilities increased by €904 million to €5,466 million during the six months to 30 June 2012 due to a number of factors including:

- Changes in demographic and financial assumptions of €595 million. In particular the discount rate used to value the scheme’s liabilities fell significantly in the period which increased sharply the value of the liabilities

- An amount of €124 million has been included in respect of past service costs for those employees expected to opt for early retirement. This represented the best estimate of the amount required to meet the additional past service costs of the early retirement scheme based on the known facts and expectations at 30 June 2012.

- Interest cost of €113 million, being the unwind of the discount on the present value of the defined benefit obligation for the half year

- Experience losses on scheme liabilities of €45 million.

Pearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance in view of the statement in Allied Irish Bank's report and accounts for the six months ending 30 June 2012 that the group pension deficit at that date was €1,457 million; if he will confirm the deficit that now exists in the AIB group pension scheme after the transfer of loan assets by AIB to the scheme, announced in August 2012, which have a book value of €1.1 billion. [52881/12]

Michael Noonan (Limerick City, Fine Gael)
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I have been informed by AIB that the bank reports the deficit under IAS 19 for financial reporting purposes twice a year, namely June and December after incorporating movements in the scheme liabilities including changes in actuarial assumptions and movement in the scheme assets. The December 2012 results will be announced in Quarter 1, 2013 and the deficit will take into account the loan assets transferred at fair value which will form part of the scheme assets.

Pearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance further to reports that Allied Irish Bank has confirmed that the first tranche of €700 million book value of loan assets transferred to the group pension fund in August 2012 as part of the total transfer of €1.1 billion book value loan assets resulted in a loss on these loan assets of €300 million, if he will confirm the loss incurred on the transfer to the AIB group pension fund of the remaining tranche of €400 million book value loan assets. [52882/12]

Michael Noonan (Limerick City, Fine Gael)
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As disclosed in AIB’s half yearly financial report 2012, the first transfer of loans and receivables, which had a carrying value of €0.7 billion resulted in a loss of €0.3 billion. Any further disclosures in respect of the second transfer of loans and receivables will be disclosed in the Annual Report for 2012 due for release in Quarter 1 2013. I have been informed that all the assets transferred had been scheduled for deleveraging within the Group’s Non-Core portfolio. The discount levels on the transfers, conducted at fair value, were in line with the levels assumed as part of the PCAR exercise in 2011.