Funding crisis must be faced: Weak laws hit workers’ pensions

THE appalling, dishonourable decision by the profitable Independent News and Media (INM) to close its defined benefit pension scheme is another indication of how government after government has dodged its responsibilities. 

The decision, one close enough to corporate piracy, is another of the thousand cuts driving disconnected politicians from office all around the world. Political inaction beckons social mayhem. By inaction, or, more correctly, deliberately letting the pensions’ hare sit, government after government has put the interests of employers and the financial sector well ahead of the legitimate expectations of those who funded a pension over a long working life. This situation was recognised through a EU directive 13 years ago but that workers’ safeguard remains unenacted here. Why? For whose benefit? That legislation secured a hard-won victory in European courts for Waterford Crystal pensioners who fell prey, unlike their British Wedgewood colleagues, to inadequate Irish legislation.

INM, where pre-tax profits rose by nearly 30% to €37.4m last year, could not pull this stunt in Britain because it would be illegal. There solvent companies must cover pension fund deficits before a scheme can be wound up. The INM scheme has a regulatory deficit of €23m — €14m less than its pre-tax profits last year. This legislative “oversight” will have a profound impact on the 400 employees who, when this latest blow is combined with a 2013 pension deal INM welched on, face pension cuts of 70%. It is not necessary to dwell for too long on what might happen if a 70% pension cut was imposed on, say, gardaí, teachers, nurses or, god forbid, civil servants and politicians. The country would grind to a halt within days if not hours. This reality underlines the pension apartheid driven by government inaction.

The pensions’ crisis facing Ireland has been described as a time-bomb so often that the warnings are ignored. The figures are startling and when combined with demographic predictions represent a real threat to social security. At the start of this year, there was a deficit of just under €3 billion in the pension schemes of large Iseq-20 companies — a group that includes CRH, Ryanair, Kerry Group, Paddy Power Betfair, and Bank of Ireland. By the end of July, this had jumped by 97% to €5.7bn. The deficit in UK companies’ funds jumped by €11.7bn in the five days after their interest rates were cut to 0.25%. The pension liabilities of the FTSE-350 firms on August 4 was estimated at a record €1,015bn. These losses must discourage any young worker considering a pension.

The figures almost seem beyond resolution but they must be confronted. A solution must be found. This is one of the great challenges facing society yet we get excited over modest water charges that will be paid one way or another. This newspaper has, many times, called for a pensions’ ministry. We do so again but with no great hope that the indifference shown by those who could drive change will turn into action. They, after all, imagine they have secure pensions.

How grateful our governments must be that we are an electorate that struggles so often to see the wood from the trees. We can’t afford this complacency any longer.


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