THE struggling pensions sector was thrown a lifeline yesterday after a November deadline for under funded defined benefit (DB) pension schemes to submit proposals to address their deficits was extended.
The decision by Minister for Social Protection Éamon Ó Cuív has been warmly welcomed by employers and the pensions industry.
At present, over 70% of DB pensions are in breach of pension legislation after the meltdown in Irish share prices over the past two years.
The November deadline had put enormous pressure on companies and trustees to come up with fresh proposals to satisfy the strict legal guidelines on pension plans to tackle the deficits.
“This deferral will allow schemes and their sponsoring employers a more realistic opportunity to find better long-term and viable funding arrangements,” said Danny McCoy, director general of the employer body IBEC.
The minister also announced plans to bring in a new form of defined benefit pension by July 2011, to an Irish Association of Pension Funds (IAPF) conference in Dublin.
These plans have resulted in the extension of the November deadline for refunding proposals.
The Pensions Board will announce the details of this extended timeframe soon, the minister said.
Research presented to the conference by the IAPF has highlighted the crisis engulfing Irish pension schemes.
It shows almost 80% of the country’s DB schemes have already closed or are likely to close to new employees. Over two thirds (67%) of Irish companies have already closed their DB schemes to new members and another 12% consider it likely. In the last 18 months alone almost 20% of firms have closed their schemes.
The IAPF has also spoken out against cutting the state pension in the budget.
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