Pensions green paper ‘within a year’
Mr Brennan, who was speaking at the publication of the latest annual report of the Pensions Board added that detailed proposals for a new mandatory system of pensions, prepared at his request by the Pensions Board are currently with Government.
It is understood that senior officials in the Departments of Finance and Social Welfare are currently going through them with a fine tooth-comb and it will be some time before a detailed response is provided.
The Government will be keen to avoid the sort of bad publicity that followed the publication of the report by Lord Adair Turner on future pension provision in Britain. While Turner’s proposals, which included a large increase in the basic pension, were backed by the Prime Minister, Tony Blair, they were effectively rubbished on cost grounds by his Chancellor, Gordon Brown.
There is concern that a new mandatory regime could increase the cost burden on employers, putting competitiveness — and jobs — at risk. IBEC is opposed to the idea while the Irish Association of Pension Funds has also come out against the idea.
Meanwhile, the Pensions Board chief executive, Ann Maher, has announced that the board has “reviewed its method of pension fund supervision in order to increase its effectiveness”. She promised a “more proactive and risk-based approach to fund supervision” from the board.
According to Ms Maher, “the results of the board’s compliance monitoring indicated improvement in overall compliance and monitoring of pension schemes. However, the board remains concerned that the standard of pension administration is varied both within practitioners and between practitioners”.
During 2005, six prosecutions were carried out. The annual report does not reveal what the outcomes of these prosecutions were.
Low levels of pension coverage across the population remains a worry.
“Issues of particular concern were the continuing funding difficulties for defined benefit schemes and the disappointing progress on increasing pensions coverage and adequacy.”
A total of 187 schemes, with 19,000 active members, for which funding certificates proposals were received, failed to meet the board’s funding standard.
However, the board also concluded that “the position of defined benefit schemes appeared to improve quite considerably during the year”.
By the end of 2005, the number of active pension schemes failing to meet the funding standard was reduced to 32% of the total.
“Around half of this 32% expect to get back to full funding within three-and-a-half years,” the board added. Whether the recent decline in share prices, worldwide, affects this position remains to be seen.
The numbers in defined benefit schemes subject to the funding standard fell to 239,000 though when public sector scheme members are included, the total number in defined benefit schemes stood at just under 500,000, an overall decline of 750.
The numbers belonging to defined contribution schemes — where the member employee carries the investment risk — rose by 9,000 to just under 235,000.
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