Michael McGrath (Cork South Central, Fianna Fail)
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319. To ask the Minister for Social Protection his plans to introduce new rules whereby solvent companies have to cover pension deficits as in the United Kingdom; and if he will make a statement on the matter. [39801/16]

Leo Varadkar (Dublin West, Fine Gael)
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In Ireland, occupational pension schemes are generally set up under trust and are maintained by the employer on a voluntary basis. The trust deeds and rules of a scheme differ from one to another and, as with any contractual situation, reflect the level of obligation on the parties involved. While the Pensions Act provides a framework for the regulation and supervision of occupational pension schemes, it does not impose any requirement on an employer to fund scheme benefits or maintain an existing scheme.

These matters have been considered many times during comprehensive reviews of the pensions system in Ireland. The introduction of a debt on employer would raise a range of issues and possible consequences for defined benefit schemes, some of which may not be beneficial for members.

It is not clear whether a change in the law could be applied to existing Schemes as well as new ones and it is not clear that any change in the law could apply to deficits already accrued as opposed to future ones.

There are strong arguments both for and against the introduction of an employer obligation. While such an obligation may seem to provide stability and certainty for scheme members it may result in less desirable outcomes such as:

- prompting well-funded schemes to wind up to avoid the new obligations being imposed thus making the change in the law counterproductive;

- threatening the company's financial stability and in some circumstances rendering employers insolvent thus resulting in the loss of job or a diminution in pay, terms and conditions of employees;

- impacting on the company's creditors, including debts owed to other businesses, SMEs, and/or individuals impacting on the company's shareholders and share values, many of which may be held by other pension funds, credit unions or small scale investors;

- impacting on company debt, investment and growth and the employers' ability to raise funds, to expand or create new employment;

- giving a competitive advantage to employers who never provided a pension and those with 'risk-free' defined contribution schemes.

I would like to assure the Deputy that the issues in relation to defined benefit schemes are continuously scrutinised by the Department, especially in the present environment.

I hope this clarifies the issue for the Deputy.