Expert group to find solutions for pensions
THE Government is to set up a commission to find solutions to the crisis in pensions, it emerged yesterday.
And tough rules on funding for company schemes are to be re-introduced by the end of the year, Social Protection Minister Joan Burton, who has responsibility for pensions policy, told a conference yesterday.
Similar to the commission appointed to find solutions for credit unions, the new body on pensions is set to seek ways to overcome a range of challenges facing retirement planning.
Three-quarters of company (defined benefit) schemes are in deficit, people are living longer, most defined contribution schemes are thought to be under-funded, and almost one million people have no pension.
The new commission is expected to be appointed in the new year, following a report being prepared by consultants, for the minister, on pension scheme fees and charges.
Speakers at an Irish Association of Pension Funds (IAPF) conference said problems with retirement planning had been made worse by the Government's controversial levy on private schemes, cuts to tax reliefs, and a cash shortfall among workers.
News that a commission is to be appointed comes less than two years after the National Framework on Pensions recommended a range of major reforms on pensions.
The framework recommended that retirement age be eventually raised to 68, and an auto-enrolment scheme be introduced for those with no private pension by 2014.
But Ms Burton told the conference she was conscious that workers and companies would struggle to cope with the extra cost of an auto-enrolment scheme at the moment.
And she revealed that the Pensions Board was preparing to re-introduce tough rules for defined benefit schemes by the end of the year.
The rules were relaxed last year to allow schemes more time to sort out their finances, but since then the deficits in some schemes have got worse.
She again hinted that the Government may cap the amount of money that can be built up in a pension tax-free.
This would be an alternative to cutting the tax relief for all of those who pay tax at 41pc.
The IAPF, which represents fund trustees, welcomed the move.
Chairman Maurice Whyms said: "Anyone who wants and can afford a pension income in excess of €60,000 can then provide for it themselves.
"The majority of pension savers will continue to be unaffected as they are average workers saving average amounts."
The IAPF also supported the Government's move to probe charges on pensions.