PRIVATE SECTOR defined-benefit pensions could have a shortfall as high as €30 billion, said Minister for Social and Family Affairs Mary Hanafin, who warned however that “the Government’s first commitment is to the State pension”.

Ms Hanafin said that up to 90 per cent of the 1,355 schemes were in deficit and the Government was not in a position to offer protection to such funds.

“They have liabilities of about €100 billion and the provisional estimate is that they are €30 billion in deficit,” she said.

“We anticipate that approximately 90 per cent of the funds are in deficit, but whether the level is 25 per cent or 50 per cent will not be known until actuarial certificates are submitted.”

She was speaking during Dáil question time as Labour spokeswoman Roisín Shortall said 500,000 people were dependent on those pensions.

She claimed the Minister had failed to take any action on the “pension time bomb” and had exposed the State to substantial claims over schemes in insolvent companies like Waterford Crystal.

The Minister said, however, that “defined-benefit schemes are private investment funds. While it is difficult for people to watch the funds into which they have been contributing running into difficulty, the Government’s first commitment is to the State pension.”

She added, however, that the Government is considering a number of proposals and issues.

Ms Shortall said the Minister had exposed the State to serious claims, arising from a European Court of Justice judgment.

Ms Hanafin said however that the European Commission was assessing the impact of that judgment and “at the time it was satisfied that Ireland was in compliance with all of the then regulations”. The commission has not yet started assessing individual countries, she added.

Ms Shortall accused the Minister of misleading the House as “the commission is not satisfied that Ireland has made adequate provision”. The UK authorities took immediate action, but nothing was done by the Government and this failure to ensure adequate protection for private pension funds exposed the State. Ms Hanafin said however the case was taken in the UK not Ireland.

The Minister also insisted that a number of actions had been taken including “allowing people extra time to show proposals on how the funding standards will be met and allowing people two years before they need to purchase their annuity by which time hopefully the markets will have picked up”.

Fine Gael spokeswoman Olwyn Enright said “it is very blasé of the Minister to say that there is an opportunity for things to improve over the course of people’s working lives”.

Ms Hanafin said the short and long-term issues to be considered by the Government.