Mick Barry (Cork North Central, Anti-Austerity Alliance)
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49. To ask the Minister for Social Protection if his Department will consider the institution of a unified State-wide defined benefit occupational pension scheme as a means of addressing the diminution on defined benefit schemes by employers. [8455/17]

Leo Varadkar (Dublin West, Fine Gael)
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Internationally as well as in Ireland, Defined Benefit (DB) schemes have been facing an increasing headwind over the last two decades. This has been due to volatility in the stock markets, increasing liabilities arising from the demographic pressures of increasing life expectancy, low interest rates, and regulatory requirements. Essentially the cost of providing benefits has increased at a rate that has not been covered by the level of employer and employee contributions to pension schemes and the investment returns earned. In addition, accountancy standards, which make pensions liabilities very apparent on a company's balance sheet, contribute to the pressures under which DB schemes are operating. During the financial crisis the decline of such schemes accelerated to the extent that the whole sector was at risk. At that stage a series of legislative amendments was brought forward to alleviate the situation. Whilst a very significant number of DB schemes have closed in recent years, in most cases they are replaced by Defined Contribution (DC) schemes, generally by agreement between employer and employee representatives. However, and for those in the workforce more generally who may find themselves without supplementary pension coverage, I have highlighted my support for the introduction of a new auto-enrolment based retirement savings system. I believe such a system is necessary because the rate of supplementary pension coverage in Ireland, estimated at just 35% of private sector workers, has, for considerable time now, been lower than is needed. If measures are not taken to address this low rate of coverage, many future retirees will suffer unwanted and potentially significant reductions in their living standards on reaching retirement. Pensions reform will continue to be a key priority for my Department. To this end, earlier this year, I confirmed an intention to develop, publish and commence the implementation of an Action Plan for the reform of pensions during 2017. This Action Plan will include a road map for the reform of the State pension, reforms to improve the current Defined Benefit and Defined Contribution pension landscape, transposition of the EU ‘IORP’ Pensions Directive and the development of an auto-enrolment supplementary pension system for working people without coverage.

I hope this clarifies the matter for the Deputy.