Foot-dragging Irish schemes nearly year late in submitting funding plans
More than 50 Irish defined benefit schemes have failed to submit funding proposals to the country’s Pensions Board by April, 10 months after deadline, according to the regulator’s latest annual report.
The Board, which earlier this year became the Pensions Authority after changes to the Irish regulatory structure, said the health of DB schemes had improved over the past year, with 49% of schemes now meeting minimum funding requirements.
According to the annual report, 35 pension funds requested cuts to benefits under Section 50 of the Pensions Act, with 28 of the applications being granted and a further six remaining under consideration.
Of the 122 schemes that submitted funding proposals, following the reinstatement of the funding standard from the end of June 2013, 11 needed points clarified by the trustee, and 18 were still being processed.
However, the Board also said 56 schemes had yet to submit any funding proposal as of April, less than one-fifth of the funds required to clarify their approach, according to minister for Social Protection Joan Burton.
Burton last July told Irish parliamentarians 212 of 300 funds had failed to meet the 30 June deadline, while the Board’s chief executive Brendan Kennedy said that, by August, the figure had fallen to just 120.
In its annual report, the Board indicated that it took a dim view of failure to submit funding proposals.
“Under the Pensions Act, the Board has powers in such cases to oblige trustees to reduce benefits or, since 2013, to wind-up the scheme,” it said.
“These are powers that will not be used lightly, but the Board does have a legal obligation to oversee the funding standard, and we will examine the outstanding schemes on a case-by-case basis and use these powers where we consider it to be appropriate.”
The Board also issued fines worth a total of €36,000 over the course of the last year – including two for schemes late in supplying actuarial certificates and one for both the late submission of the actuarial funding certificate and documents outlining how it would meet the 10% risk reserve requirement.
The regulator is not only concerned with the oversight of DB schemes, with Kennedy emphasising the importance of a functioning defined contribution (DC) market.
“Among our concerns are costs borne by members, especially in smaller schemes; inefficiencies; investment choices and defaults; and member information,” he said.
The Board’s report also noted that the potential introduction of a mandatory or semi-compulsory pension framework, as suggested by the OECD, the “single greatest change to occupational pensions in a generation”, would significantly impact its regulatory activities.