Roderic O'Gorman (Dublin West, Green Party)
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1332. To ask the Minister for Employment Affairs and Social Protection if he is aware of instances where large multinational employers have historically implemented a pension vesting policy whereby employees with less than five years of service that accrued a defined benefit pension entitlement have had this service disregarded for the purposes of calculating final pension entitlement at retirement today; the number of persons that may be affected by this policy; the sectors which are affected; if he plans any measures to address this anomaly; and if he will make a statement on the matter. [44733/25]

Dara Calleary (Mayo, Fianna Fail)
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I hope the Deputy will appreciate that all defined benefit (DB) schemes are different, with their own trust deeds and scheme rules, and my Department would have no role in or knowledge of the historical pension vesting rules which may have applied under individual schemes.

Scheme trustees have duties and responsibilities under trust law, under the Pensions Act 1990, as amended, and under other relevant legislation. The duties of pension scheme trustees include administering the scheme in accordance with the law and the terms of the trust deed and scheme rules as well as ensuring compliance with any legal requirements that apply to these schemes.

The concept of mandatory preservation of pension benefits was first introduced when the Pensions Act 1990 ("1990 Act") was enacted. Prior to the introduction of the 1990 Act, a person who left relevant employment before normal pensionable age could, depending on the rules of the scheme, not have had any entitlement to preserved benefits (or ‘vested pension rights’) and pension contributions may, subject to the rules of the particular scheme, have been refunded at the date of termination of their relevant employment.

Section 28 of the 1990 Act, which came into force in 1991, provided for the statutory preservation of benefits for members of all occupational pension schemes who leave relevant employment before normal pensionable age, for any reason, other than death, provided they satisfy certain qualifying conditions. Following commencement of section 28 on 1 January 1991, a member of a scheme whose relevant employment ceased was entitled to a preserved benefit provided the member had completed at least 5 years' qualifying service of which at least 2 such years fell after January 1991.

In order to expand pension coverage and enhance retirement income, section 28 of the 1990 Act was amended, with effect from 1 June 2002, by the Pensions (Amendment) Act 2002 to provide that a person who has completed at least two years qualifying service is entitled to a preserved pension benefit. It should be noted that this provision does not apply retrospectively, i.e. it only applies to members who leave a pension scheme post 1 June 2002. The Pensions (Amendment) Act 2002 implemented the recommendations of the National Pensions Policy Initiative (NPPI) which followed an extensive consultation period with industry and social partners.

Section 28 of the 1990 Act applies to all defined benefit pension schemes that are subject to Part III of the 1990 Act and, consequently, all such schemes must operate in accordance with the preservation rules. If a person does not have an entitlement to a preserved benefit at the time the employment contract is terminated, a refund of employee contributions, if relevant, may be paid to the former employee.

It would not be appropriate to retrospectively provide for vested pension rights for persons who did not meet qualifying service requirements at the time of leaving the relevant employment as to do so would give rise to legal complexities and place a significant unplanned financial burden on defined benefit schemes and, in some cases, could potentially threaten the solvency of such schemes.

I hope this clarifies matters for the Deputy.