In late 2008, the Trustees of the ESB Superannuation Scheme brought forward the Tri-Annual Valuation of the Scheme by one year to assess the financial health of the Scheme. The Actuarial Valuation to 31 December 2008 showed an ongoing valuation deficit of €1.9 billion and a Minimum Funding Standard deficit of €1.8 billion. As required by the Scheme rules, ESB and the ESB Group of Unions formed a working group to assess how best to address the reported deficit and to protect as far as feasible the interest of ESB and the current members of the Scheme. ESB reached an agreement with staff in 2010 to resolve the pension deficit. The measures adopted under that agreement have, I understand, had a positive effect, resulting in the Scheme Actuary recently reporting that the Scheme is now in balance on an on-going actuarial basis.
Aside from the on-going actuarial position, the Pensions Board also requires the ESB Scheme to assess whether it could meet a certain prescribed standard, known as the Minimum Funding Standard (MFS). This effectively tests whether the Scheme could meet all its current obligations if it were wound up immediately. Neither the Government nor the ESB envisages the winding up of the Scheme but regardless, the Scheme is currently still required to meet the requirements of the MFS. I understand that the Scheme Actuary reported at the end of 2011 that the ESB scheme, like many others, did not, at that time, satisfy the MFS requirements.
I am advised that the Pensions Board does not require the MFS deficit to be addressed immediately but does require that a plan be developed to address it over a reasonable time. I am informed that the Trustees of the ESB scheme, with the agreement of ESB, submitted a funding plan to the Pensions Board, which was approved in October 2012. In light of the fact that the funding plan was submitted in 2011, the then existing rules relating to the Minimum Funding Standard applied - the Pensions Board published revised MFS rules in June 2012 for addressing pension fund deficits. I am also informed that the ESB plan aims to eliminate the deficit by 2018 and that this plan remains on track.
Finally, with regard to the manner in which ESB accounts for the Scheme in its financial statements, my Department has been assured by the ESB that having taken expert legal and financial advice, the Company is satisfied that the current accounting treatment for the Scheme is correct and in accordance with applicable laws and international accounting standards. I understand that the ESB Scheme remains registered with the Pensions Board as a defined benefit scheme, based on the relevant definitions as set out by the Pensions Act.