Some retirees could see post-job income halved

Pensioners on high retirement incomes could see their entitlements slashed by up to 50% as the Government tries to ensure funds in insolvent defined benefit schemes are distributed more fairly between those in retirement and those still of working age.

At present, when a defined benefit (DB) pension scheme goes bust, 100% of existing pensioners’ entitlements are protected, while those yet to reach retirement age see the sum they will receive decimated. Now though, the Government has announced a number of scenarios to ensure the non-retired members of the schemes will receive greater entitlements. The changes, for which Social Protection Minister Joan Burton was given Cabinet approval yesterday, can be broken down into three scenarios.

nDouble insolvency: When both a company and its DB pension scheme become insolvent, the funds will be divided to ensure all beneficiaries of the scheme (pensioners, current employees, and former employees who have not yet retired) will be guaranteed 50% of their entitlements. Existing pensioners will have their payment protected up to €12,000. If the pension scheme does not have enough funds to meet the above requirements, the fund will be bolstered from the Government’s pension levy funds;