Pearse Doherty (Donegal South West, Sinn Fein)
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238. To ask the Minister for Finance if he will explain the approach of Allied Irish Banks, in which he controls 99.8% of the shares and which transferred €1.1bn to its pension fund to address a deficit in August 2012, and Permanent TSB, in which he controls 99.5% of the shares, which has written to members of its pension scheme threatening to halt contributions to the pension scheme unless scheme members accept large reductions in benefits [18760/13]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware all the staff pension schemes within the Covered Institutions are separate entities set up under Trust and managed by Trustees and the individual circumstances and issues arising can vary widely between the institutions. The level of benefits payable under each scheme reflects the historical nature of the scheme and its funding position. It is a matter for the Trustees in consultation with the relevant employer to restructure the schemes in order to address deficits arising.

As the Deputy will be aware there are Relationship Frameworks in place with both AIB and Permanent TSB which provide the basis on which the relationship between the Minister and AIB and Permanent TSB are governed. The Relationship Frameworks recognise that AIB and Permanent TSB remain separate economic units with independent powers of decision and that the Boards and management teams retain responsibility and authority for determining their institution’s strategy and commercial policies and conducting their day-to-day operations.

Both AIB and Permanent TSB are independent institutions with independent pension fund trustees and they may adopt different approaches to address deficits in their pension funds. The Deputy will also be aware that the asset transfer to AIB’s pension scheme was directly linked to the bank’s Early Retirement and Voluntary Severance programme and was essential for the bank to be able to fund these plans. It was not connected with addressing any existing deficit in the bank’s pension fund. The Deputy will also be aware that the Minister, on behalf of the Government, has directed the Covered Institutions, including AIB and Permanent TSB to come up with plans to deliver savings of 6-10% of total remuneration costs, following the Mercer report.