IBEC’s pension funds warning

EMPLOYERS’ group IBEC has called for an urgent review of pension rules and has warned of the death of many defined benefit schemes if funding standards – put in place by the Pensions Board – are not altered.

The body is urging Government to reduce the current minimum funding standard facing DB pension schemes, in order to give firms “necessary flexibility” to make the best long-term investment decisions. It added that the current funding standard is “draconian” and “does not reflect the current economic reality” and is “hastening the demise of otherwise viable DB schemes.”

According to IBEC director Brendan McGinty: “Many private sector defined benefit pension schemes are facing a November deadline from the Pensions Board to submit proposals on how they plan to address scheme deficits. However, firms are concerned they are being forced to make investment decisions that will meet the draconian minimum funding standard in the short-term, but will negatively impact the long-term viability of these schemes.