The Irish Association of Pension Funds has hit out at the Government for hesitating over its plans to provide for people losing out from defined benefit pension scheme failures.
The Government last year indicated that it would reform the Pensions Act in order to ensure a fairer outcome for members of defined benefit schemes that wind up in deficit.
Estimates recently communicated by Irish Life & Permanent& suggested that as many as 80% of defined benefit schemes here are failing to meet funding standards, with the accounting deficit at around the €8bn mark.
The Pensions Board proposed just a couple of years ago that 1,000 such pension schemes existed, but were closing at a rate of 200 per year. IL&P’s updated figures show there are now fewer than 900 in existence.
Last October, Social Protection Minister Joan Burton received support for saying the Pension Act would be amended “to provide for a more equitable outcome for all scheme members who have contributed to the pension fund”.
Speaking at yesterday’s IAPF annual investment conference in Dublin, IAPF chairman Maurice Whyms said that such an amendment should already have been made, by now, and that Government inactivity could have huge consequences.
“Recent indications have been that the Government has now decided not to make any changes at this time,” he said. “This is extremely worrying as it will lead to situations where current workers could lose a significant amount of pension they have built up, often at the same time as losing their job,” he said.
“If this change doesn’t come into force, some long-service active employees who are close to retirement may, in some instances, have most of their pensions wiped out. This could be as difficult an issue for the Government to deal with, than changing the current protection afforded to pensioners.”
A spokesperson for the Department of Social Protection said the amendments have not been dropped, but a decision would take time.
“Given the significance of the proposed change, the minister is concerned that all possible avenues and technical aspects are explored before making a final decision.”
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