Clare Daly (Dublin Fingal, Independent)
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250. To ask the Minister for Employment Affairs and Social Protection the arrangements which exist in the case of pension scheme wind-ups which mandate the purchase of expensive annuities when members would prefer choice, for example an approved retirement fund. [48640/17]

Regina Doherty (Meath East, Fine Gael)
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Scheme trustees have duties and responsibilities under trust law, under other relevant legislation and under the Pensions Act, 1990, as amended. The duties of pension scheme trustees include administering the trust in accordance with the law and the terms of the trust deed and rules. Consequently any decisions made by corporate or individual trustees of an occupational pension scheme are governed by the relevant legislation. Scheme trustees must always act in the best interests of scheme members.

Usually the options available to members for taking benefits will be set out in the trust rules. In some cases, the benefit structure may be inflexible, leaving the member little or no choice as to the form which his or her benefits will take.

Section 48 of the Pensions Act 1990 sets out the priorities on winding up a scheme. It sets out the order in which the liabilities must be discharged and also how they may be discharged for members.

When a scheme winds up, section 48(3)(b) provides that, notwithstanding the rules of the scheme, the trustees may discharge the liability for benefits payable for any member by one of the following –

1. Transfer the benefits of each member into a new pension scheme;

2. Purchase of an approved assurance policy with a company or insurance agency that sells life insurance;

3. Transfer the benefits into another arrangement for the provision of retirement benefits (e.g. PRSA).

The Taxes Consolidation Act sets out the circumstances in which retirement benefit schemes are to be approved by the Revenue Commissioners for tax purposes. Section 772 sets out conditions for approval of schemes and allows for flexible options on retirement – the Approved Retirement Fund (ARF) option. I understand that the ARF option does not generally apply to Defined Benefit schemes, subject to certain exceptions . Legislation in relation to ARFs is a matter for the Department of Finance.

I hope this clarifies the matter for the Deputy.