David Cullinane
Ceist:539. Deputy David Cullinane asked the Minister for Social Protection the safeguards for workers who pay into a pension scheme that has been directed to be wound up by the Pensions Authority. [41044/16]
Amharc ar fhreagraTuesday, 17 January 2017
Ceisteanna (539)
Freagraí scríofa
I understand the importance of ensuring that safeguards are in place for scheme members where a pension scheme is being wound up as a result of a direction by the Pensions Authority.
The Pensions Authority has the power to issue a direction to the trustees of a defined benefit pension scheme to:
- restructure scheme benefits under section 50 of the Pensions Act or
- wind up a defined benefit pension scheme under section 50B of the Pensions Act.
The Pensions Authority would consider exercising these powers in situations where a scheme fails to comply with the scheme funding requirements (funding standard) as set out in Part IV of the Pensions Act.
To date the Pensions Authority has never had to use the powers available under the Pensions Act to direct the unilateral wind up of a pension scheme.
The Occupational Pension Schemes (Section 50 and 50B) Regulations 2014, [S.I. No. 392 of 2014] sets out the procedure to be followed when the Pensions Authority is considering making a direction under section 50 of the Pensions Act to restructure the benefits of a pension schemes or a direction to wind up a pension scheme under section 50B of the Pensions Act.
These Regulations set out the:
- Requirement on such persons as may be specified, to provide specified information to the Pensions Authority in its consideration of proposals to issue a direction under section 50 or section 50B of the Pensions Act.
- Requirement on the employer and the trustees of a pension scheme to notify scheme members, beneficiaries, the authorised trade union or any representative group of proposals by the Pensions Authority to issue a direction to restructure scheme benefits or to wind up a pension scheme.
- Provision for scheme members, beneficiaries, authorised trade unions or any representative group to make a submission to the Pensions Authority in respect of proposals by the Pensions Authority to issue a direction to restructure scheme benefits or to wind up a pension scheme.
This affords members or their representative groups an opportunity to make a submission to the Pensions Authority in relation to such proposals. They also have the right to appeal such a direction by the Pensions Authority to the High Court on a point of law.
Where a scheme is being wound up, the Pensions Act requires trustees to complete the wind-up without undue delay. The Act also set outs wind-up priority orders that depend on whether the scheme’s employer is solvent or insolvent at the date of the wind-up.
Section 48 of the Pensions Act sets out the wind-up priority order in which the assets of a defined benefit pension scheme are distributed in the event of the wind-up of a scheme. The wind-up priority order was amended by the Social Welfare and Pensions (No. 2) Act in 2013 to provide greater protections to active and deferred scheme members.
In cases where not all employer pension contributions have been made, trustees can claim under the Insolvency Payments Scheme. The purpose of the scheme, which operates under the Protection of Employees (Employers’ Insolvency) Act 1984, is to protect certain outstanding pay-related entitlements due to employees in the event of the insolvency of their employer. These entitlements include certain pension contributions.
Where a scheme is underfunded at the date of wind-up and the employer is also insolvent, a claim for additional funds from the Exchequer may be made to discharge the liabilities for benefits contained in section 48(1D) of the Pensions Act.
I hope this clarifies the matter for the Deputy.