Tuesday, 19 February 2019

Ceisteanna (80, 108)

John Brady


80. Deputy John Brady asked the Minister for Employment Affairs and Social Protection the protections in place for members of defined benefit pension schemes in cases in which an employer seeks to move away from such a scheme; and if she will make a statement on the matter. [7992/19]

Amharc ar fhreagra

Willie Penrose


108. Deputy Willie Penrose asked the Minister for Employment Affairs and Social Protection the status of her plans to protect defined benefit pension schemes; and if she will make a statement on the matter. [8114/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Employment)

I propose to take Questions Nos. 80 and 108 together.

Defined Benefit (DB) schemes are voluntary tri-partite arrangements between employers, employees (or their representatives) and trustees.  Responsibility rests with all the parties for ensuring that the scheme is properly managed and funded to meet the promised level of benefits. Almost all Irish defined benefit pension schemes have a rule that allows the employer to cease contributions, usually after a notice period. 

Currently there is no legislative obligation on an employer to make contributions and no further liability on an employer where contributions cease.  Neither is there an obligation on an employer to give notice to members or to consult in advance of ceasing contributions. 

Where a scheme is closed to new members or to future accrual of benefits, the sponsoring employer role continues in relation to that scheme.  Where a defined benefit scheme is closed to future accrual of benefits the scheme remains subject, under EU and Irish law, to the funding standard requirements and to the Pensions Act generally.  It must continue to satisfy the minimum funding standard into the future. 

Scheme trustees have duties and responsibilities under trust law, under the Pensions Act 1990, as amended, and under other relevant legislation.  The duties of pension scheme trustees include administering the scheme in accordance with the law and the terms of the trust deed and scheme rules as well as ensuring compliance with the requirements that apply to these schemes.  Trustees must act in the best interests of all scheme members, whether active, deferred or retired, and must serve all beneficiaries of the scheme impartially. 

As the Deputies will be aware, the General Scheme of the Social Welfare and Pensions Bill 2017 (now the Social Welfare, Pensions and Civil Registration Bill 2017) was published in May 2017 and contained a number of key measures relating to DB pension schemes.  It is intended that these measures will act to support existing provisions in the Pensions Act by providing for further protection for scheme members’ benefits and enhancing employer responsibilities for their schemes.

In July 2018, Government approval was obtained to draft additional provisions to be included in the Bill at Committee Stage including provisions relating to defined benefit schemes.

In developing these provisions, it is essential to be cognisant of the current pension landscape in Ireland so that a balanced, proportionate approach is developed and that unintended negative consequences do not arise.

The provisions of this Bill will introduce a new regime into the Pensions Act 1990 which, amongst other things, will ensure that an employer cannot “walk away” at short notice from the pension scheme it is supporting by providing for a 12-month notification period, and will enable the Pensions Authority to make a funding obligation direction specifying payments to be made by a sponsoring employer to the pension scheme where no agreement is reached, within a specified time period, to resolve a funding deficit.

The defined benefit pension provisions are very technical and involve complex policy issues.  In order to achieve a resilient solution it has been necessary to consult in detail with other Government Departments and obtain numerous legal advices from the Office of the Attorney General on various aspects of the provisions.  When outstanding matters have been resolved and amendments approved by Government, an early date for Committee Stage will be requested.

I hope this clarifies the matter for the Deputies.