Written answers

Tuesday, 4 November 2014

Department of Social Protection

Pension Provisions

Photo of Seán Ó FearghaílSeán Ó Fearghaíl (Kildare South, Fianna Fail)
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117. To ask the Minister for Social Protection if she is satisfied that the current pension legislation protects the interests of deferred pensioners sufficiently; her plans to improve pension coverage here; and if she will make a statement on the matter. [41713/14]

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Pension schemes in Ireland are generally set up under a trust. The management of the scheme is a matter for the employer and the trustees of the pension scheme. The obligation on the sponsoring employer will be set out in the trust deed and scheme rules. The trustees of the scheme are required to act in the best interest of all scheme members.

The Pensions Act provides a framework for the regulation and supervision of occupational pension schemes. Among the key provisions in the Pensions Act are the requirements on the trustees of a pension scheme to maintain sufficient resources in the scheme to meet the liabilities of the scheme in the event of the wind up of a scheme and the requirement to preserve and revalue the benefits of former scheme members who have not reached normal retirement age as set out in the rules of the scheme.

The Pensions Act provides for the preservation of benefits for members of occupational pension schemes who leave employment before their normal pensionable age for any reason, other than death, provided they satisfy certain qualifying conditions. The preserved benefit is a proportion of the long service benefit to which the member would have been entitled if he or she had remained in employment until normal pensionable age. The preserved benefit which is payable from a defined benefit pension scheme will normally be revalued annually by the lower of 4% or the rate of change in the Consumer Price Index.

The Pension Act has been amended on a number of occasions in recent years to help employers and the trustees of pension scheme address the funding challenges facing many schemes. A key element in many of these changes was the sharing of the risk of scheme underfunding among all categories of scheme members. The manner in which these changes are applied is a matter for the employer and the trustees of a pension scheme.

The recent changes to the Pensions Act are underpinned by additional measures which have been put in place by the Pensions Authority to assist pension schemes achieve a sustainable funding position. It is the medium term objective that all defined benefit schemes will achieve a level of funding which will include a funding risk reserve to protect the rights of scheme members against future volatility in financial markets.

There are no plans at this stage to bring forward amending legislation to enhance the present provisions in the Pensions Act in relation to deferred scheme members.

The OECD recommended that the single greatest goal in Irish pension policy should be to increase pension coverage through the introduction of a mandatory or quasi mandatory earnings related scheme and/or by improving financial incentives. This key recommendation was aimed at improving the adequacy of pensions by increasing coverage in the funded part of the pensions system.

In line with the OECD key recommendation and with the Programme for Government, the recent 2014-2016 Statement of Priorities confirmed that the Government will agree a roadmap and timeline for the introduction of a new, universal supplementary pension saving scheme. This decision has been taken in response to the adequacy and sustainability challenges in the Irish pensions system which has become an increasing concern in recent years. Development of this roadmap for a universal pension over the course of 2015 will involve detailed consideration of policy and operational parameters, and will include co-operation across a range of Government departments and engagement with all sectoral interests.

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