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Defined Benefit Pension Schemes

Dáil Éireann Debate, Tuesday - 5 November 2013

Tuesday, 5 November 2013

Questions (633, 634, 635, 636)

Mary Lou McDonald

Question:

633. Deputy Mary Lou McDonald asked the Minister for Communications, Energy and Natural Resources if he was consulted prior to ESB management’s decision to treat the employees' defined benefit pension scheme as a defined contribution pension scheme in the company's annual accounts from 2010 and each year thereafter. [47091/13]

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Mary Lou McDonald

Question:

634. Deputy Mary Lou McDonald asked the Minister for Communications, Energy and Natural Resources if he signed off on the ESB annual accounts of 2010 on behalf of the Government as the majority shareholder, and each year thereafter since taking office. [47092/13]

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Mary Lou McDonald

Question:

635. Deputy Mary Lou McDonald asked the Minister for Communications, Energy and Natural Resources if, in 2011, his attention was drawn to concerns raised by the ESB auditors, KPMG, prior to his signing of on the company's annual accounts on behalf of the Government as the majority shareholder with regards to the company's accounting treatment of the employees' defined benefit pension scheme. [47093/13]

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Mary Lou McDonald

Question:

636. Deputy Mary Lou McDonald asked the Minister for Communications, Energy and Natural Resources if, in 2011, his attention was drawn to refusals by ESB management to provide the company's auditors, KPMG, with documentation, information and confirmation regarding the company's decision to change the accounting treatment of the employees' defined benefit pension scheme to a defined contribution pension scheme. [47094/13]

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Written answers

I propose to take Questions Nos. 633 to 636, inclusive, together.

Insofar as the share capital of ESB is concerned, the Minister for Public Expenditure and Reform holds 85% capital stock in the company, the Minister for Communications, Energy and Natural Resources holds 10% and the ESB's current and former employees hold 5% through the Employee Share Ownership Plan. The manner in which the ESB accounts for the company's Pensions Scheme is a matter for the company, bearing in mind the company's legal obligations to the scheme and the applicable international accounting standards.

The accounting treatment of the Pension Scheme as a defined contribution scheme was set out in the financial statements adopted by ESB in 2010, 2011 and 2012 on which the ESB's auditors have expressed unqualified opinions in each of these years. In other words, in each of these years the ESB's auditors' opinion is that the financial statements give a true and fair view of ESB's affairs. ESB's view remains that the defined contribution accounting treatment adopted by the company in 2010 correctly reflects ESB's obligations to the scheme.

I am informed by ESB that the nature of the Pension Scheme, and ESB's legal obligations in the event of a deficit arising in the Scheme were unchanged both by the 2010 pensions agreement and by the accounting treatment adopted in 2010. The change in treatment of the scheme for accounting purposes in 2010 did not change the nature of the scheme itself nor did it change the entitlements of the scheme members or the company's legal obligations to the scheme. In addition, the accounting treatment of the scheme has no bearing on the registration of the scheme as a defined benefit scheme with the Pensions Board. This registration, as a defined benefit scheme with the Pensions Board, is based on the relevant definitions as set out by the Pensions Act.

I would also point out that each year on presentation of the ESB Annual Report and Accounts, the Chairman of the Board furnishes a written report in accordance with section 13.1 of the Code of Practice for the Governance of State Bodies. The Minister for Communications, Energy and Natural Resources each year asks the Government to note the Annual Report and Accounts of the ESB, pursuant to section 32 of the Electricity (Supply) Act 1927.

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