Moves to shore up pensions dismissed as inadequate

MOVES to shore up recession-ravaged pension schemes were dismissed as inadequate last night as unions warned the elderly faced a life of “penury”.

ICTU general secretary David Begg insisted that unless the Government offered a more radical rescue plan to lift packages, which had plunged €30 billion into the red during the stock market slump, it could scupper a new social partnership deal.

Social and Family Affairs Minister Mary Hanafin said the State could not afford to go as far as unions wanted, but was trying to help the 90% of defined benefit schemes in the private sector thought to be in the red.

The Pension Insolvency Payment Scheme, to be run by the National Treasury Management Agency, is intended to cushion the blow of companies going into insolvency.

The move would see the trustees of a scheme paying a sum to the Government which would cover the cost of paying the pensions of their retired members, instead of having to buy annuities from insurance companies.

Ms Hanafin said this could lead to significant savings that could be put towards the pensions of those people who have yet to retire.

However, union bosses insisted the move was inadequate to deal with the scale of the problem.

“This just not go far enough. We need a pension protection fund like every other country has. We need to support schemes that will collapse in an insolvency situation.

“All we are doing now is offering an A&E service for the problem instead of tackling it properly. We are leaving old people to a life of penury,” Mr Begg said.

The ICTU chief said the matter could wreck hopes of concluding a social partnership deal this week.

“We are willing to walk away on the issue in the sense that it is crucial to any notion of social solidarity. We need to make a decision as a nation that we will treat our old people properly and fairly and pay them back in their old age,” he said.

Ms Hanafin said she was concerned that 55% of people had no private pension provision, and the Government “would go as far as it could” on the issue in the final round of talks with unions and employers.

She said the State was already paying €5bn a year in public pension funds and €3bn in private ones.

Ms Hanafin also signalled cuts in higher tax relief for private pensions were on the way in the next budget.

Ms Hanafin announced proposed amendments to the Pensions Act which would ensure that pain is shared more equally among members of schemes that either need to be restructured or that are wound up with a deficit.


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