THE Irish Association of Pension Funds (IAPF) has launched a strong attack on the Government over its failure to deal with the crisis threatening Irish pension funds.
At the opening of its conference in Dublin, IAPF chairwoman Marie Collins said the rules and regulations were no longer “fit for purpose”.
Ms Collins said the Irish pensions industry was clearly in crisis and 80% of the country’s defined benefit (DB) schemes have already closed or were likely to close to new employees.
She also warned the Government to keep its hands off the old age pension in the forthcoming budget.
“We do not believe there should be any cuts to the state pension,” she said in response to rumours that a reduction in the old age pension was being considered by the Government as it seeks to cut close to €4 billion in spending from next year’s budget.
Instead the Government urgently needs to put in place new funding standards for such schemes.
To do nothing would amount to a decision by the Government to preside over the destruction of DB pensions, she said.
Addressing the conference, Minister for Social Protection Eamon Ó Cuív said the Government will speed up the implementation of new rules on DB pension schemes.
Mr Ó Cuív said the new model would be implemented following legislative changes next July.
He said a number of measures would be taken to help schemes maintain viability, adding that a pensions insolvency payment scheme had already been implemented.
The minister said it would be a tight call as to whether a move by Irish pension funds to buy more of the country’s sovereign bonds might be accepted.
“There are issues that have to be examined very carefully, and we are looking at it,” he said.
“I won’t give any indication one way or the other, it is a 50-50 call.”
Welcoming the developments on DB pensions announced by the minister, Danny McCoy, director general of the employer and business body IBEC, said the moves on DB schemes would remove a lot of pressure on firms desperately trying to resolve their funding difficulties.
“This deferral will allow schemes and their sponsoring employers a more realistic opportunity to find better long-term and viable funding arrangements.”
In the current stressed environment, businesses were being forced to make investment decisions to meet “a draconian minimum funding standard in the short-term” that would negatively impact the long-term viability of these schemes, he said.
“The proposed revision of the defined benefit pensions model is welcome if it succeeds in better preserving the benefits to workers. It will allow employers and trustees to revise investment and benefit structures to ensure they have a more robust and sustainable future,” he said.
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