IRISH occupational pension schemes are usually established under trust. This means that the assets of the pension fund are held legally separate from those of the employer. The assets are not part of those of the employer and, in theory, would not be available to creditors of the employer in a liquidation or bankruptcy.

This provides an important element of security for pension scheme members. (The trust arrangement is also a requirement of the Revenue Commissioners for tax exemption approval for a pension scheme.)

The fund of a pension scheme can amount to a significant sum and to an employer in financial difficulties it may appear an attractive source of short term free finance.

While the assets may be held under a separate trust, it could happen, for instance due to a close connection between the employer and the trustees that the trust itself will not provide an effective safeguard.

There have been a number of infamous cases in Britain, and in this State, in which companies have gone into liquidation and, subsequently, the company pension funds have been found to be significantly in deficit.

While there is no current evidence that Irish employers are inclined to resort to this method of finance, the Government has introduced new statutory measures to make this even less likely. The Pensions (Amendment) Act, 1996 - which became law in July - contains provisions requiring mandatory disclosure (whistle blowing) in the case of misappropriation of the resources of a pension scheme.

A voluntary reporting procedure has also been introduced.

The 1996 Act inserted into the Pensions Act 1990 (the Act) a new part (Part VIII) which imposes a compulsory reporting obligation on certain persons who are involved in the operation of a pension scheme.

The persons concerned (referred to as relevant persons in the Act) in relation to any scheme include the auditor, the actuary or trustee, any insurance intermediary and any investment business firm that has advised in relation to the scheme or received payment in relation to investment of any of the scheme's assets.

The obligation to report arises if a person has reasonable cause to believe that a material misappropriation or fraudulent conversion of the scheme resources has occurred, is occurring or is to be attempted in relation to a scheme to which he is a relevant person.

The report must be made by the relevant person to the Pensions Board. Failure to make a report, or knowingly making an incorrect report, is an offence under the legislation. The penalties for failing to comply with the provisions are significant a fine of up to £10,000 or imprisonment for up to two years.

In addition to this compulsory reporting obligation, the Act also provides for voluntary reporting.

In the case of both compulsory and voluntary whistle blowing, the person making the report is protected under the Act from being sued either by his client or any - other person provided that the report is made in good faith.

To bolster these provisions, the Act also gives the High Court the power, on application from the Pensions Board, to order the restoration of any assets of the pension scheme which are shown to have been wrongfully paid or transferred to any person.

The court also has power, under these provisions, to order the person to whom the payment or transfer was made to restore the resources of the scheme to the level that they would have been at, had the payment or transfer not been made.

The Act also gives the High Court power to grant an injunction, on application by the Pensions Board, to prevent a misappropriation or misuse of any assets or resources of a pension scheme.

The Act already imposes an obligation on trustees of pension schemes and employers to disclose information to members at regular intervals, and - in the case of certain schemes - to have scheme accounts audited, and the resources of the scheme actuarily valued.

These new provisions will impose greater obligations on the many persons involved in operating or providing services to pension schemes whether they be auditors, actuaries, trustees, investment intermediaries or investment advisers. However they will clearly provide greater security for pension scheme members.