Lack of action on failed pension schemes unfair to workers – IBEC
THE Government's decision not to include changes to how pensioners are prioritised when a pension fund becomes insolvent will put the livelihoods of thousands of workers at risk, industry groups have warned.
Under the current rules, people already claiming their pension take precedence if a defined benefit pension scheme is deemed insolvent and has to be closed. That means that a 64-year-old still working can have their pension fund decimated, while a 65-year-old who has just retired will not have their pension touched.
The Government had been expected to amend the "priority order" in the upcoming Social Welfare and Pensions Bill.
However, the social protection minister is now expected to postpone changes to pension schemes while the Government studies last month's judgment from the European Court of Justice which could put the Government on the hook for a €300m bill to make good on a pension deficit at the former Waterford Crystal.
The Government is now expected to look at a number of reforms later this year, including forcing companies to plug a shortfall in their pension, or the introduction of a pension guarantee fund.
Employers' group IBEC said the lack of reform "puts the entitlements of thousands of workers at risk". "Recent changes in Government policy have increased the costs of pension provision," said the group's director Brendan McGinty.
"Many workers now face the prospect of reduced benefits or scheme closures, while pensions paid to existing pensioners will be untouched. This is wholly inequitable, especially in a wind-up situation," he said.
Fianna Fail's spokesman on social protection Willie O'Dea roundly criticised the Government for its perceived lack of action.
"The contents of the Social Welfare and Pensions Bill will be massively disappointing for tens of thousands of pension scheme members in Ireland.
"This failure to address the priority order will result in people who have already retired having priority on assets of insolvent pension funds ahead of colleagues who are still working," he said. "People who have been working all their life face the prospect of a huge reduction or even a total loss of pension entitlements while former executives of companies are guaranteed to receive very generous pensions.
"This is unfair, unjust and inequitable. On two occasions Minister Burton has given a firm commitment to both ICTU and IBEC that this situation would be rectified in the current pension legislation but she has once again failed to address this matter," Mr O'Dea added.