Relaxing of pension scheme rules urged to tackle escalating crisis
THERE have been calls for rules for company pension schemes to be relaxed.
Company pension schemes that are in deficit have until the summer to put in place a plan to restructure their scheme.
They have to submit this funding proposal to the Pensions Board, setting out how defined benefit schemes are to get back on track financially.
The so-called minimum funding standard must outline in minute detail how schemes that are in deficit are to get back into surplus over a 10-year period.
A recent survey by business consultants Lane, Clark and Peacock, which studied the largest defined benefit pension schemes in the country, revealed that the net deficit of schemes increased to €10bn by the end of September 2012.
Fianna Fail spokesman on Social Equality Willie O'Dea, TD, yesterday called on the Government to act urgently to address the crisis in the private pension system.
"There are about 1,000 defined benefit pensions in Ireland with approximately 120,000 members," he said.
"Unfortunately the vast majority have drifted into insolvency.
"There has been a lack of action on the part of the Government regarding this.
"It has led to the creation of an unprecedented crisis, many pension schemes now face being wound up."
He claimed that rather than tackle the problem, the Government had introduced additional risk rescue requirements, making it harder for defined benefit schemes to reach solvency. "The funding requirement test must be amended for these schemes as a matter of urgency.
"Extra risk rescue requirements must also be temporarily suspended with immediate effect," the TD said.
"Otherwise the future of 120,000 pensioners will be very uncertain and many pensioners will finish up with no pensions at all.
"Immediate action is needed by the Government to address this crisis."
Under pensions' legislation, defined benefit schemes must meet a minimum funding standard.
The requirement is meant to ensure that, in the event of a wind-up of the pension plan, members' benefits are still protected.