Dáil Éireann Debate, Wednesday - 17 September 2014
70. Deputy Michael McGrath asked the Tánaiste and Minister for Social Protection the implications of a court ruling (details supplied) on the provision of defined benefit pension schemes; and if she will make a statement on the matter. [33284/14]
View answerThe ruling in this case is noted.
However, I would point out that defined benefit pension schemes are normally established under trust and maintained by employers on a voluntary basis. The obligation imposed on an employer and on scheme members is normally agreed and set out in the trust deed and rules of each scheme. The trust deeds and rules differ from scheme to scheme and reflect the parameters on the level of obligation of the parties involved.
The Pensions Act imposes a requirement on the trustees of a defined benefit scheme to maintain sufficient assets in a scheme to meet the liabilities of a scheme. This is often referred to as the funding standard. The funding standard provides a benchmark against which the "health" of a scheme can be tested. When a scheme fails the funding standard that means that unless some action is taken, the scheme will not be able to pay the benefits promised. The existence of the funding standard itself is not the central issue in relation to whether a scheme is properly funded. Rather the responsibility rests with the employer and the trustees for ensuring that the scheme is properly funded and managed.
A number of both administrative and legislative changes have been made in recent years to assist both employers and the trustees of pension scheme address the funding difficulties facing many schemes at this time.
In 2012, I amended the Pensions Act to require the trustees of pension schemes to maintain a additional level of funding in the form of a risk reserve to protect the interests of scheme members against future volatility in financial markets. This requirement will come into effect from 2016. The trustees of defined benefit pension schemes were required to inform the Pensions Authority of their funding position by June 2013. The Pensions Authority is working with the trustees of defined benefit pension schemes, particularly schemes in a weak funding position, to help them achieve a sustainable funding position.
