Dáil Éireann Debate, Tuesday - 11 February 2014
300. Deputy Clare Daly asked the Minister for Social Protection if she will introduce legislative changes in order to emphasise employer responsibility for pension schemes and for funding future pension protection schemes, as is the case in most other EU countries. [6418/14]
View answerIn developing the measures contained in the Social Welfare and Pensions Act (No.2) 2013, consideration was given to imposing an obligation on employers to secure a minimum level of funding before a scheme could be wound up and to the provision of a pension protection scheme. You will be aware that defined benefit pension schemes in Ireland are set up and maintained by employers on a voluntary basis. There has never been a statutory obligation on employers under Irish law to contribute to their pension scheme (although schemes rules can place some level of obligation). Most defined benefit pension schemes in Ireland were established under a trust deed. As part of the process of establishing each occupational pension scheme, an employer undertakes to be bound by the rules of the scheme and to undertake certain liabilities and duties defined therein. The position regarding the employers and employees contribution obligation in a trust deed varies from deed to deed.
Employers have, by and large, made great efforts to support and deliver on the promise made to scheme members. This process is generally managed through dialogue between trustees, employers and members, where efforts are made to reach agreement regarding the steps that must be taken to secure scheme viability. This may include a mix of measures such as increased employer/member contributions, longer working and amended benefits.
Given the uncertainties as to the overall impact and potential for unintended consequences of applying an obligation on an employer to secure a minimum level of scheme funding in the event of the wind up of a scheme, it was not considered appropriate to make provision for such a legislative obligation. While some countries with very large defined benefit markets provide pension protection schemes it was considered that such an approach was not appropriate in the Irish context.
The Social Welfare and Pensions (No.2) Act 2013, provides that, in the event of the wind up of an underfunded pension scheme where the employer is insolvent, the State guarantees that existing pension benefits will be protected to a level of 50%, with pensions of €12,000 or less being 100% protected. The Pension Board is actively engaged with the schemes which do not meet the scheme funding requirement in order to assist these schemes, particularly schemes in a weak funding position, achieve a more sustainable funding position. The overriding priority in this area is to ensure that pensioners and members of pension schemes are protected and the future viability and sustainability of their schemes is ensured and made safer.
