IRELAND - The Irish pensions regulator has embarked on a public consultation on the funding of defined benefit pension schemes.
The Pensions Board, which monitors the funding of DB schemes through the minimum funding standard set out in the Pensions Acts, said it acknowledged many schemes were now having “difficulty” meeting the current funding standard.
“In light of this, the Board is reviewing the standard and looking at possible alternatives,” the Pensions Board said.
The board would welcome feedback from trade unions, employers, consumers, pensioners, pension professionals, actuaries, accountants, lawyers, pension funds, pension industry and the public Aongus Horgan, assistant head of information and training told IPE.
The funding standard defines the minimum level of assets that each scheme must hold and sets out the rules that apply if a scheme falls short.
Announcing the publication of its Consultation Document on Review of the Funding Standard, the board’s chief executive, Anne Maher, said the aim of the exercise was “to seek as wide a range of views as possible on the most effective funding standard for the future”.
Maher pointed out that the funding standard should balance safeguard of the benefits that members have accrued and encouraging defined benefit provision.
“The Board believes that Defined Benefit is the best form of provision for employees as the employer bears the risk so the Board wishes to see current Defined Benefit provision maintained if possible,” Horgan stated.
“If a funding standard provided absolute security to members, it would be so demanding and inflexible that it would be likely to end defined benefit scheme provision.”
“On the other hand a funding standard that has no effect from time to time, especially in terms of requiring increased contributions, is unlikely to be providing any useful protection to scheme members”, Maher added.
The board said it preferred the existing provision for an extended funding period in certain circumstances, together with a slight modification of the calculation of the standard for active and deferred members.
“When agreeing its preference, the Board took into account the need for the funding standard to abide by the provisions of the EU Pensions Directive which must be implemented next year.”
The consultation period ends on September 10.