Pension action urged
Tuesday 16th July 2013
Organisations representing unions, employers, actuaries and pension funds have jointly called on the Government to reform pension regulations to protect workers whose defined benefit pension schemes are in crisis.
In an unprecedented step, ICTU, IBEC, the Irish Association of Pension Funds and the Society of Actuaries in Ireland last week issued a statement calling for changes to the rules that currently give retired members of pension schemes full protection, but leave current staff totally at risk if schemes collapse.
They said 200,000 ‘active’ (or non-retired) members of pension schemes, many with modest pension expectations, will pay a heavy price if the Government fails to act fast. “The simple truth is that, in the unfortunate event of a scheme winding up in deficit, people of working age continue to risk losing everything before pensioners can be asked to give up anything,” they said.
The four organisations say government inaction and “onerous new regulations” have exacerbated a pension crisis in which more than 400 defined benefit schemes, affecting nearly 65,000 workers, have closed since the end of 2008. While calling for practical government measures to slow the rate of scheme closures, they say wind-up rules should also be changed to give more protection to working members of pension schemes.
Under the current wind-up rules for failed schemes, a retired worker will have his or her full pension protected, while a worker months from retirement could be left with little or no pension rights at all. Retired members can only suffer a reduced pension when active members have lost everything.
“We hope that the seriousness of the situation is underlined by the unprecedented step of IBEC, ICTU, IAPF and the Society of Actuaries in Ireland for the first time collectively calling on the Minster for Social Protection and her Government colleagues to take immediate action,” the statement says.
Earlier this year, IMPACT’s Services and Enterprises conference called on the Minister to convene a commission on defined benefit pension schemes “with a view to establishing an appropriate regulation system that would remove unnecessary uncertainty.”