Dáil Éireann Debate, Thursday - 27 March 2014
114. Deputy Willie O'Dea asked the Minister for Social Protection the level of demand to date for amortising bonds used to underwrite sovereign annuities; her views on the operation of sovereign annuities; and if she will make a statement on the matter. [14647/14]
View answerI am very aware that many defined benefit pension schemes are coming from a deficit position and this is a difficult problem which requires careful management. The Government’s introduction of the sovereign annuity initiative provided an option which enables the trustees of a pension scheme to reduce pension scheme liabilities and benefit from the premium available through sovereign annuities over traditional annuities. I am pleased to see the uptake of sovereign annuities has been strong. Data from industry indicates that the vast majority of annuities purchased in 2013 were sovereign annuities. The total premium amount in 2013 was over €400 million which enabled the purchase of approximately €30 million in pensions per annum. These pensions were in respect of over 1,700 scheme members. This development is to be welcomed as it facilitates the release of extra funds for scheme members.
Irish pension schemes have the majority of their assets invested outside of Ireland. As well as providing a mechanism for more prudent investment and a better outcome for scheme members, sovereign annuities deliver a win-win benefit as they ensure the retention of funds within the domestic economy. This initiative by Government has attracted significant pension fund investment into the economy, with feedback from the NTMA indicating a continuous demand, amounting to €1.377 billion to date, for the amortising bonds used to underwrite sovereign annuities.
