Mick Barry
Ceist:67. Deputy Mick Barry asked the Minister for Social Protection his views on the decline of occupational defined benefit occupation schemes over the past thirty years. [8456/17]
Amharc ar fhreagraTuesday, 21 February 2017
Ceisteanna (67)
Freagraí scríofa
I am very much aware of the public concern highlighted by the recent publicity surrounding defined benefit (DB) schemes.
DB schemes have been facing substantial challenges over the last two decades. This is due to volatility in the stock markets, increasing liabilities arising from the demographic pressures of increasing life expectancy, low interest rates, and regulatory requirements. Essentially the cost of providing benefits has increased at a rate that has not been covered by the investment returns earned by pension schemes. In addition, accountancy standards, which make pensions liabilities very apparent on a company's balance sheet, contribute to the pressures under which DB schemes are operating.
During the financial crisis the decline of such schemes accelerated to the extent that the whole sector was at risk. At that stage a series of legislative amendments was brought forward to alleviate the situation. This followed much consideration of a range of matters such as balancing returns between members, debt on the employer and pension protection funds.
In spite of the difficulties, many employers have made great efforts to support and deliver on the pension promise made to scheme members. Many scheme trustees are working hard to ensure the on-going viability of their schemes. This process is best managed through discussion and negotiation between trustees, employers and members, where efforts are made to reach agreement regarding the steps that must be taken to secure scheme viability. These steps may include a mix of measures such as increased employer/member contributions, longer working and amended benefits. I believe that this is the best approach to scheme difficulties.
I believe further steps can and should be taken in relation to the funding standard. Following discussions between my officials, the Pensions Authority, the Society of Actuaries and the Irish Association of Pension Funds, the Pensions Authority will shortly bring forward proposals to allow some additional flexibility for DB schemes and to tackle some difficulties with the current operation of the standard. I intend to consult employer and union representatives on these proposals before making any changes.
I hope this clarifies the matter for the Deputy.
Question No. 68 answered with Question No. 61.