James Fitzsimons: We need transparency in our public sector pensions
If the system was fair, nobody would face retirement poverty, as a million of us do
THE Pensions (Amendment) Bill 2013 has been passed reforming how the assets of insolvent schemes will be divided between pensioners, serving staff and others. Pensioners get priority over staff who had not yet retired. From this year, pensioners of insolvent schemes could lose some of what they have. The first €12,000 is safe. Pensions of between €12,000 and €60,000 can be cut by 10 per cent and those over €60,000 by 20 per cent of the total pension.
The temporary pension levy introduced in 2011 was increased by 25 per cent this year to help plug the holes. The problem is so acute that the temporary levy will probably be made permanent. It's robbing Peter to pay Paul, as it takes €500m a year from the poor relation defined contribution schemes to prop up insolvent defined benefit schemes. It's a mess and the solution is making things worse.
The Government was too quick to plug the holes in underfunded bank schemes. It pumped about €2.5bn into Bank of Ireland, AIB and the EBS. That's enough to wipe out the arrears of 150,000 distressed residential mortgages. The BoI scheme was bailed out prematurely, leaving it able to buy back its preference shares, thus robbing taxpayers of even a dividend for the funds we gave it. Sections 49 and 50 of the Pensions Act have been changed to allow schemes in trouble to be restructured to ensure their survival. That could have happened at the banks. It was madness to waste scarce resources when it can't provide for health services for the most vulnerable.