200,000 pensions at risk unless rules change, warns FF's O'Dea
Published 11/04/2013 | 05:00
STRICT rules for pension schemes for 200,000 people must be eased to stop large numbers of company plans from collapsing, former minister Willie O'Dea said.
His proposals have been endorsed by the Irish Association of Pension Funds, which represents pension trustees.
Mr O'Dea said the Pensions Board had confirmed that 90pc of defined-benefit schemes were now in deficit. They face closure or will have to reduce the benefits members are set to get.
Around 1,000 defined-benefit schemes exist, covering some 200,000 workers.
"Those potentially affected include such bellwether employers as Independent Newspapers, RTE, Aer Lingus, IBEC, ICTU and the major banks," the Fianna Fail TD said.
"Many thousands of workers will now lose part, if not all, of their pensions next year."
Traditional defined-benefit schemes are in trouble because employers are unable to fund them, falling bond yields means the liabilities of plans have mushroomed and because of tough Pensions Board rules on funding requirements.
Unless the rules are relaxed, trustees will be forced to close schemes they would prefer to keep open, Mr O'Dea said.
"They will have to buy annuities for retired members at a time when annuities are at their most expensive. They will have to distribute any remaining assets in a most inequitable fashion," he added.
He said many workers who had paid for their entitlements over 20 or 30 years would be left high and dry.
Workers in their mid to late-50s would be hit twice, he warned, as they had already lost up to three years of their state pension as the age is being raised to 68.
Mr O'Dea also proposed that the rules on how the funds of a scheme are distributed when it winds up should be changed to give those yet to retire a greater share of the assets.
Irish Association of Pension Funds director Jerry Moriarty said the Fianna Fail proposals on defined-benefit schemes made sense.