Written answers

Tuesday, 25 October 2016

Photo of John CurranJohn Curran (Dublin Mid West, Fianna Fail)
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181. To ask the Minister for Finance the progress made to date in establishing a mechanism which would facilitate funding being used by organisations such as the League of Credit Unions or Irish pension funds to provide social housing in an off-balance sheet manner; and if he will make a statement on the matter. [31925/16]

Photo of Maurice QuinlivanMaurice Quinlivan (Limerick City, Sinn Fein)
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186. To ask the Minister for Finance the action his Department has taken to investigate with credit unions the way in which they can support social housing through the voluntary housing service, as promised in the programme for Government. [32104/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 181 and 186 together.

The agreed Programme for a Partnership Government recognises the potential role that credit unions can play in housing finance and supports the efforts of the Registrar of Credit Unions at the Central Bank to gradually lift current lending restrictions as appropriate, including for housing. The Programme further provides that it will investigate with all stakeholders how credit unions can support the delivery of social housing.

The Department of Housing, Planning, Community and Local Government is the Department primarily responsible for the formulation and implementation of policy and the preparation of legislation in relation to housing. 

The Registrar of Credit Unions at the Central Bank is the independent regulator of credit unions, and ultimately any decision around credit unions providing such funding would require regulatory approval prior to implementation. The Central Bank commenced a number of new regulations for credit unions on 1 January 2016.  Prior to their commencement, following careful consideration, the Central Bank made a number of modifications, including to Regulation 25(2), which makes reference to the fact that the Central Bank may prescribe, in accordance with section 43 of the Credit Union Act 1997, further classes of investments for credit unions which may include investments in projects of a public nature. The effect of these modifications is that regulation 25(2) now provides that investment in projects of a public nature can include, but are not limited to, investments in social housing projects.

My Department has received a number of different proposals from the Credit Union Development Association (CUDA) and from the Irish League of Credit Unions (ILCU). Proposals from both representative bodies, in relation to the funding of social housing, are at various stages of development. Officials from both my Department and the Department of Housing, Planning, Community and Local Government have met with these bodies on a number of occasions to examine how credit unions can assist in the area of social housing. Officials from both Departments also met with the Central Bank on 21 April 2016 to provide information of a technical nature in relation to social housing funding arrangements. This was with a view to assisting the Central Bank in understanding how these arrangements operate, as it deals with issues arising from proposals put forward for credit union investment in social housing.

Ultimately, the funding mechanisms required will have to be put in place in the first instance by credit unions themselves, with the support of its members and with the agreement of the Central Bank, without negatively impacting on the General Government Balance, and keeping the funding 'off-balance sheet'. Both my Department and the Department of Housing, Planning, Community and Local Government will continue to contribute to this process by providing necessary technical advice and support. 

The Government recognises the important role of credit unions as a volunteer co-operative movement in this country. The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and it is determined to support a strengthened and growing credit union movement. 

The Issue of Irish Pension Funds is a matter for my colleague Leo Varadkar TD Minister for Social Protection. His Department has informed me that in relation to the investment by trustees of pension schemes in certain classes of assets, there are requirements for trustees to satisfy under both the Institutions for Occupational Retirement Provision (IORP) Directive 2003/41/EC and the Pensions Act 1990. The Directive requires that the resources of a scheme must be invested in accordance with the 'prudent person' rule and in particular in accordance with certain investment rules. The Pensions Act provides also that trustees of a scheme must provide for the proper investment of the resources of the scheme in accordance with regulations and the rules of the scheme.

Investment of pension funds in housing assets is allowable if investments are made in accordance with the 'prudent person' rule and with other prescribed rules.

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