Homeowners in arrears not allowed access to pensions
Published 14/09/2011 | 05:00
HOMEOWNERS who are in trouble with their mortgages will not be allowed to dip into their pensions to bail themselves out, it has emerged.
There are almost 56,000 homeowners in arrears at present, according to the Central Bank.
This could rise to 97,000 by the end of next year if the current rate of increase of 10pc per quarter continues, calculations by Karl Deeter, of Irish Mortgage Brokers, show.
There have been calls for a relaxation of the rules banning people getting access to their pension funds before they retire in cases where homeowners are heavily indebted.
The issue was examined by a range of government departments and the Revenue Commissioners. Chaired by officials specialising in pensions policy from the Department of Social Protection, the group analysed proposals to assist debt-distressed families.
The idea was to allow indebted households to draw down part of their accumulated pensions.
The Economic Management Council, which is made up of the Taoiseach, Tanaiste and Finance Minister, commissioned the report, the Irish Independent has learnt.
It is understood that the report found there was no evidence that those most likely to be affected by mortgage debt have access to sufficient pensions savings to make a difference to their situation.
The legislative and administrative implications for such a scheme would be extremely complex and would appear excessive given the overall impact, the group told the Economic Management Council.
It was also felt that longer-term difficulties, where people were not making adequate provision for their retirement, would be exacerbated, with potential for increased demands on the State.
After receiving the report, the Economic Management Council has decided not to allow pensions to be tampered with.
This comes as the Government has ruled out any large-scale debt-forgiveness plan, but it is expected to put in place a new agency that will arbitrate in situations where borrowers feel they are being treated unfairly by their banks.