IBEC anger at Pensions Board guidelines

EMPLOYERS’ representative body IBEC has called for a meeting with thePensions Board over itsrecently issued guidelines for pension schemes, which have variously been described as being short- sighted, rigorous and intolerable.

IBEC and other industry bodies have reacted angrily to the Pensions Board’s latest guidelines surrounding section 50 applications.

These applications seek permission from the body to reduce benefits previously offered within occupational pension schemes, in order to meet the minimum funding standard requirement.

It is thought that a large number of defined benefit schemes are considering making Section 50 applications due to their challenge in meeting funding standards. It has already been estimated that more than 90% of all defined benefit schemes in the country have funding shortfalls.

While the Pensions Board has said that the new guidelines are no stronger than previous levels, IBEC has warned they will force many employers to wind up some defined benefit schemes.

Industry consultant Mercer – in a letter to clients – basically agreed. It called the new measures “far more prescriptive” and “rigorous” than expected and said that in many cases it may not be feasible to formulate a recovery plan that complies with the new requirements “and schemes will, therefore, have to be wound up”.

It is understood that the Society of Actuaries in Ireland has also met with the Pensions Board over the issue. However, a spokesperson for the organisation yesterday refused to comment on the outcome of those talks.

The Pensions Board said that its aim, with the updated guidelines, was to ensure that pension schemes can be assured of coping in adverse economic conditions.

The organisation added that it would only be granting Section 50 applications where it is satisfied that the proposed future operation of the scheme “is robust enough to make any further application unlikely”.