Michael McGrath (Cork South Central, Fianna Fail)
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69. To ask the Minister for Social Protection the reason a holder of a personal retirement bond who was previously a member of a defined benefit scheme which was subsequently wound up is not entitled to invest in an approved retirement fund; and if she will make a statement on the matter. [33283/14]

Joan Burton (Dublin West, Labour)
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Personal Retirement Bonds, otherwise known as Buy-out-Bonds (BoBs), are approved by the Revenue Commissioners on a generic basis under Chapter 1 of Part 30 of the Taxes Consolidation Act 1997. A BoB is a pension vehicle designed to receive transfer payments from occupational pension schemes as a consequence of a scheme member leaving service, the winding up of a scheme or of pension splitting in the context of a Pensions Adjustment Order. They are not savings vehicles in their own right. An individual with a BoB cannot make contributions to the BoB.

I understand that it has always been a condition of the approval of generic BoB policies that the benefits to be provided to an individual under such policies be subject to the same restrictions and conditions that applies to the occupational pension scheme from which the BoB originated. As you are aware the option of investing in an Approved Retirement Fund (ARF) is available to holders of a BoB where the originating scheme was a defined contribution scheme. Such an option is not available to holders of a BoB where the originating scheme was a defined benefit scheme.

There are fundamental differences between a defined contributions pension scheme and a defined benefit pension scheme. Any consideration of making the ARF option available to a holder of a Bob where the origination scheme was a defined benefit pension scheme would fundamentally change the defined benefit model and potentially impact both on the promised benefits to scheme members and on the funding standard. Such a proposal will be considered in the context of a review of personal pension vehicles with a view to rationalising provision in this area. I expect that this review will be undertaken in the near future.

Michael McGrath (Cork South Central, Fianna Fail)
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70. To ask the Minister for Social Protection the implications of a court ruling (details supplied) on the provision of defined benefit pension schemes; and if she will make a statement on the matter. [33284/14]

Joan Burton (Dublin West, Labour)
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The ruling in this case is noted.

However, I would point out that defined benefit pension schemes are normally established under trust and maintained by employers on a voluntary basis. The obligation imposed on an employer and on scheme members is normally agreed and set out in the trust deed and rules of each scheme. The trust deeds and rules differ from scheme to scheme and reflect the parameters on the level of obligation of the parties involved.

The Pensions Act imposes a requirement on the trustees of a defined benefit scheme to maintain sufficient assets in a scheme to meet the liabilities of a scheme. This is often referred to as the funding standard. The funding standard provides a benchmark against which the "health" of a scheme can be tested. When a scheme fails the funding standard that means that unless some action is taken, the scheme will not be able to pay the benefits promised. The existence of the funding standard itself is not the central issue in relation to whether a scheme is properly funded. Rather the responsibility rests with the employer and the trustees for ensuring that the scheme is properly funded and managed.

A number of both administrative and legislative changes have been made in recent years to assist both employers and the trustees of pension scheme address the funding difficulties facing many schemes at this time.

In 2012, I amended the Pensions Act to require the trustees of pension schemes to maintain a additional level of funding in the form of a risk reserve to protect the interests of scheme members against future volatility in financial markets. This requirement will come into effect from 2016. The trustees of defined benefit pension schemes were required to inform the Pensions Authority of their funding position by June 2013. The Pensions Authority is working with the trustees of defined benefit pension schemes, particularly schemes in a weak funding position, to help them achieve a sustainable funding position.