Sorting out the pensions mess must be done fairly
THE word crisis is much overused, but when it comes to the pensions situation it is valid. For evidence of this one has to look no further than the 25pc surge in complaints to the Pensions Ombudsman's office last year. An extra 2,000 people felt the need to make complaints to Ombudsman Paul Kenny, the person who investigates disputes in an independent and impartial manner.
Launching the annual report for the Ombudsman Service, Mr Kenny said there had been a surge of inquiries from people trying to unlock funds from their pensions before they reach retirement age.
Minister for Social Protection Joan Burton, who has responsibility for pensions policy, cautioned against this and said she and Mr Kenny had a common purpose in trying to protect pensions for people.
However, the thousands of members of defined benefit schemes might question this claim, as Ms Burton has decided to put off changing the rules on how schemes that are winding up divide up the assets between pensioner members and those yet to retire.
She defended her inaction yesterday, saying that a recent European Court of Justice ruling relating to the collapsed Waterford Crystal scheme had to be studied by her office and by the Attorney General. Yet the ECJ judgment came as no surprise to anyone who has any knowledge of pensions. The Waterford workers were entitled to compensation, under EU rules, when their scheme and their company both collapsed.
The problem at the moment is that eight out of 10 defined benefit schemes are in deficit. Each week yet another scheme closes, the latest being PricewaterhouseCoopers, Aviva and Permanent TSB. When the schemes shut down those in receipt of pensions get priority over the assets, and often there is little left for those yet to reach retirement age. This is unfair and Ms Burton has promised for almost two years now that she will rebalance the situation. Pensioner electoral power seems to be scaring the Cabinet from moving on this issue.
Those yet to retire, who have paid into a pension, deserve better.