IRELAND – Issues surrounding the equality of Ireland's current wind-up order are being "very actively examined", the minister for social protection has said.
Speaking at yesterday's launch event for the review of Ireland's pension system by the OECD, Joan Burton would not be drawn on her views on the introduction of 'debt upon the employer' legislation.
However, when asked about concerns raised in the report that the current priority order for the distribution of defined benefit (DB) pension assets – whereby pensions in payment receive absolute priority over active and deferred members – was inequitable, she said: "That is a matter that is for consideration by the government – and is currently being very actively examined."
John Martin, the OECD's director for employment, labour and social affairs, said the absence of debt upon the employer legislation, allowing plan sponsors to abandon underfunded schemes and close them, was a concern for the think tank.
"That does need to be reviewed because it is simply really inequitable to allow this to continue into the future," he said.
The OECD report's main recommendation was for Ireland to increase private pension coverage through a compulsory system, a point emphasised repeatedly by Martin as he presented the results.
When asked how future pension savers could be certain their pot would not be used to aid the state paying off debt – such as the future payment of loans stemming from the liquidation of the Irish Bank Resolution Corporation – Burton stressed that security of assets would be key to any reform's success.
"In the context of the experience we've had in Ireland in relation to the National Pensions Reserve Fund," she said," that would be a key criterion in the design of a supplementary pension scheme – that, in fact, ownership would very firmly reside with the contributor and that recent experiences we've all read about."
"That would be extremely important in terms of confidence because, of course, if you do contribute to a pension fund, you do need confidence that that pension fund is going to be there for you."
The National Pensions Reserve Fund, meant to accumulate assets for the payment of future pension liabilities, was largely used to recapitalise Ireland's banks in the wake of the financial crisis.
Legislation is expected in the near future that will allow the remaining €6bn in assets to be used for domestic investment.
The OECD was very clear that management of any future pension assets should remain with private asset managers and pension funds, and suggested that any semi-government body launched to support auto-enrolment or compulsion could be focused on collecting contributions, keeping records and channelling contribution payments to the employee's selected private manager.