Thursday 18 January 2018

Burton will not rule out new levy on schemes

Peter Flanagan

Peter Flanagan

THE Government has refused to rule out imposing a new levy on pensions, as it seeks to cover the cost of shortfalls in pension schemes at companies that go out of business.

Soon after being elected two years ago, the Government brought in a 0.6pc annual levy on private sector pensions, which is expected to raise close to €2bn by the time it ends in 2015.

Social Protection Minister Joan Burton said she "could not rule anything out" as the State waits to find out how much money it will have to set aside for pension schemes in companies which go bust.

Last April, the European Court of Justice found in favour of Waterford Crystal workers who took a case against the State for the loss of their pensions when the company went bankrupt.

The case has now been referred back to the Irish courts, but the likelihood is the Government will have to cover the cost of the scheme. The case is seen as setting a precedent for pension schemes at other companies in financial difficulty.

The State could be facing a bill of up to €300m in the Waterford Crystal case alone. "It will be a significant and important judgment," said Ms Burton. "I would imagine it will have consequences for the Exchequer but we have to wait for the judgment.

"The 'how much' is a very significant question," she added. Ms Burton was speaking yesterday at the launch of the Pensions Board annual report, which shows a small decrease in the number of people in schemes compared to a year ago.

In 2012, some 760,620 people were members of occupational pension schemes. Board chief executive Brendan Kennedy said pensions were experiencing "a lot of problems" and that "a number of schemes" were likely to close.

"We simply don't know (how many will close this year). Clearly a number of schemes are going to close, and the sponsoring employers will have to make a very difficult decision.

Mr Kennedy said there were numerous issues within the pensions business today. "Poor pensions administration and record keeping, which could result in members not receiving all of the benefits to which they are entitled, is of real concern."

The board prosecuted 23 companies or company directors for breaches of pension law in 2012, most resulting in fines of between €100 and €4,000.

Irish Independent

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