Dáil Éireann - Volume 507 - 24 June, 1999

Written Answers. - Pension Provisions.

86. Mr. Higgins (Dublin West) asked the Minister for Social, Community and Family Affairs if, further to Parliamentary Question Nos. 415 and 416 of 20 April 1999, he will furnish copies of the minutes of the meetings between Department officials and a person (details supplied) regarding frozen pensions. [16180/99]

Minister for Social, Community and Family Affairs (Mr. D. Ahern): The meetings referred to in my earlier replies took place in August 1994, October 1996 and August 1998. The Deputy will [160] recall that the first of these meetings took place with the Pensions Board.

To encourage and facilitate open and frank discussion of the issues, the structure of the meetings was informal and consequently no minutes were taken of the discussions. However, I can assure the Deputy that the Department is satisfied that all issues raised by the person concerned were discussed comprehensively and in detail at those meetings.

87. Mr. Higgins (Dublin West) asked the Minister for Social, Community and Family Affairs the value of the benefit enjoyed by pension fund assets through early leavers referred to in the national pensions policy initiative consultation document of February 1997; and the value of any knock-on benefit to the Government. [16181/99]

88. Mr. Higgins (Dublin West) asked the Minister for Social, Community and Family Affairs the reason private sector early leavers pension benefits in respect of pre-1991 service are not revalued or preserved. [16182/99]

90. Mr. Higgins (Dublin West) asked the Minister for Social, Community and Family Affairs the reason private sector employees have no choice of pension fund operator resulting in no meaningful competition for the pension industry. [16184/99]

91. Mr. Higgins (Dublin West) asked the Minister for Social, Community and Family Affairs the reason private sector employees are still compelled to join company pension schemes particularly when these schemes served early leavers so badly in relation to pre-1991 service. [16185/99]

Minister for Social, Community and Family Affairs (Mr. D. Ahern): It is proposed to take Questions No. 87, 88, 90 and 91 together.

The issues relating to occupational pensions raised in these questions were considered by the Pensions Board in the context of the widespread consultation process undertaken by the board in preparing its report on the national pensions policy initiative. This report “Securing Retirement Income” was published in May 1998 and a copy was circulated to each Deputy at the time.

While it was acknowledged in the NPPI consultation document that pension, defined benefit, scheme assets can benefit through early leavers, the impact would vary between schemes as a result of different rules and provisions applying under the voluntary occupational pension system. The Pensions Board considered that if a statutory requirement to revalue all pre-1991 service was placed on pension schemes, the additional costs involved for schemes with many deferred pensioners and few current members, could, be considerable in percentage of payroll terms and [161] could, threaten the solvency of a scheme in certain circumstances.

In relation to the issue of revaluation of deferred benefits for members of occupational pension schemes who left such schemes prior to 1991, when the Pensions Act, 1990, came into effect, the usual position is that leaving service benefits are calculated by reference to the period of scheme membership and salary at the time of leaving and are not subject to revaluation. The Pensions Board examined the issue of early leavers but did not recommend a statutory requirement to revalue all pre-1991 rights. However, the board urged employers to consider the revaluation of such benefits, where people remain members of the scheme, on a voluntary basis.

On the issue of choice, I would stress that occupational pension schemes are trust-based and the trustees of the individual schemes are responsible to the scheme members in relation to matters such as choice of provider, investment of funds etc. I would also point out that the Government has accepted the Pensions Board recommendation on the introduction of a new pensions savings vehicle, the personal retirement savings account. This will be a simplified pensions savings mechanism which it is hoped will encourage more providers to enter the market-place and allow greater choice for the consumer. The legislative framework for the introduction of PRSAs will form part of the new occupational Pensions Bill which I expect to publish later this year or early 2000.

In relation to membership of occupational pensions schemes, I have to stress that the provision of an occupational pension scheme is a voluntary matter for individual employers. As I mentioned earlier, arising from the voluntary nature of the arrangement, differing rules apply regarding membership but in the NPPI report the Pensions Board recommended that it should remain permissible for an employer who is contributing to a pension scheme to have or make it a condition on taking up employment, that employees join the pension scheme. The board considered this condition to be essential to avoid the possibility of unscrupulous attempts to tempt people out of employer-sponsored schemes as happened in the United Kingdom for example, where employers were legally prohibited from having scheme membership as a condition of employment. I would have to say that I fully support the pensions board recommendation in this regard.

In conclusion, I am satisfied that the consultative process leading to the NPPI report was both comprehensive and inclusive and that the issues raised by the Deputy received due attention in that context. I now look forward to moving the process forward and giving legislative effect to many of the Pensions Board proposals in the new pensions Bill which I referred to earlier.