97. Deputy Denis Naughten asked the Minister for Social Protection if she will ensure that pensioners are given a right of audience with pension scheme trustees; and if she will make a statement on the matter. (Question 53448/13 asked on 12 Dec 2013)
Minister for Social Protection (Deputy Joan Burton): Defined benefit pension schemes in Ireland are in general set up under trust. The trustees of such pension schemes have a fiduciary duty under trust law and the Pensions Act to act in the best interest of all scheme members. In addition, the Pensions Act provides for further safeguards to protect the interest of pensioners. In the event of the wind up of a pension scheme the provision in the Pensions Act gives priority to the benefits of pensioners before any assets of the scheme are distributed to meet the liabilities of other scheme members.
The Social Welfare and Pensions (No. 2) Bill is amending this provision to provide for a more equitable distribution of scheme funds in the event of the wind up of a scheme. This change will only impact where the scheme is underfunded. However, pensions up to €12,000 per annum will continue to retain the same level of protection as heretofore. For higher pensions, 90% of the annual amount between €12,000 and €60,000, and 80% of the annual amount over €60,000, will also have priority over the distribution of assets to other scheme beneficiaries.
The Bill also amends the Pensions Act to extend the options available to trustees of a scheme by providing for reductions of a portion of the benefits payable to pensioners. The restructure of scheme benefits under section 50 of the Pensions Act is not an arbitrary matter and must comply with the requirements of the Pensions Act and the criteria set out in statutory guidance.
Before the trustees make an application to the Board, they must consult with the employer, the scheme member, with pensioners and with the authorised trade union representing members. Trustees must undertake a comprehensive review of the scheme with a view to the long term stability and sustainability of the scheme.
In advance of any application to the Pensions Board to restructure scheme benefits, the trustees must notify, in writing, all members of the scheme including pensioners of; The circumstances giving rise to the proposed application and the reasons why the trustees believe an application is in compliance with their fiduciary duties; the proposed benefit reductions which are to apply to each category of member or other person and the reasons for treating one or more categories of member or other person differently to others; that the trustees have requested additional contributions from the employers to avoid the necessity for a reduction in benefits and the response of the employers; provide general examples of the projected impact of the reduction(s) on members using such assumptions as the actuary deems appropriate.
Members have 30 days to respond to the notification and their interests will be considered. In the context of the current Bill, stakeholder groups including pensioner representatives were consulted last year and asked to make submission in relation to the proposed changes to the Pensions Act. The input from the stakeholders was taken into account in developing the proposals in the Bill. It would be my intention that this practice of consultation with pensioner representatives and indeed with all stakeholder representatives would continue in relation to any further consideration of changes to the Pension Act. As I said at the outset, the trustees of a defined benefit pension scheme are required under trust law to act in the best interest of all scheme members. The changes I am proposing in this Bill will enhance the ability of the trustees to protect the overall best interest of all scheme members.