Wednesday, 8 May 2013

Questions (76)

John McGuinness

Question:

76. Deputy John McGuinness asked the Minister for Finance if he intends to address the issues which have been raised relative to retirement funds such as ARFs and AMRFs and the fact that persons have lost considerable money which was set aside as their pension funds; and if he will make a statement on the matter. [21755/13]

View answer

Written answers (Question to Finance)

I understand that the Deputy is referring to losses potentially incurred by certain ARF/AMRF pension funds as a result of the liquidation of IBRC. I am advised that there are a small number of pension funds that were placed on deposit with IBRC that may not be entitled to compensation under the deposit guarantee scheme, DGS, or the eligible liabilities guarantee scheme, ELG, due to the nature of the products or deposit options in which those account holders invested. It is important to note that at the time the products were offered to customers there was no additional guarantee provided by the State in respect of those products.

It was always the case that the ELG scheme covered only those liabilities which were entered into during the issuance window. In relation to the DGS Scheme, I am advised that the DGS Regulations explicitly specify which deposits are excluded from coverage under that Scheme. Deposits held by pension funds and retirement funds fall within the category of excluded deposits, though small self-administered pension schemes are included. The decision to include SSAPs and exclude ARFs, AMRFs and other pension funds/instruments was based on the fact that SSAPs are usually small schemes administered by the member(s) of the scheme whilst ARFs are managed by a qualified fund manager through a credit or investment institution.

Through the liquidation process, the proceeds from the disposal of IBRC’s assets will be used to repay creditors in accordance with normal Companies Acts priorities and consequently, preferred creditors will be paid first and then debt purchased by NAMA from the Central Bank will be paid. If there are proceeds available after repayment in full of the NAMA debt, these proceeds will be applied to remaining unsecured creditors. This would include depositors to the extent that their deposits are unguaranteed.

There are standard rules which apply to the distribution of the assets of companies in liquidation and it would not be appropriate for me to interfere with these rules. Such interference could have the impact of diverting the assets of IBRC from one category of creditor to another outside the normal Companies Acts priorities and would be open to challenges in the Irish Courts by unsecured creditors.