Why pension change is the right move

YESTERDAY evening, the minister for social protection announced a welcome change in the priority order which does away with the absolute priority of pension liabilities in limited circumstances, subject to pensioners receiving 50% of their final benefits, or €12k in pension income, whichever is greater.

This has followed unprecedented lobbying from the pensions industry, Trustee bodies and trade unions to try to get some change to the existing unfair priority order over the last two years in particular.

From a Government perspective, the change addresses the current exposure of the State following the ruling of the European Court of Justice (ECJ) in Apr 2013, which stated that Ireland is in breach of the EU Insolvency Directive. The ECJ ruled that when both the employer and pension scheme are insolvent, the State must put measures in place to provide at least 49% of the pension benefits expected.