IRELAND - Defined benefit (DB) schemes in deficit have been granted a year longer to achieve full funding under Ireland's revised funding standard, but will be expected to submit proposals compliant with the regulation by the end of the year, according to new guidance from the Pensions Board.
The country's regulator today released long-delayed statutory guidance advising trustees how to implement changes stemming from this year's Social Welfare and Pensions Act.
Under the act, schemes must hold financial buffers equivalent to 15% of liabilities, as well as assets able to offset a 0.5% interest rate change.
However, the legislation also allowes for schemes to offset any funding requirements by holding sovereign annuities or the bonds of any European Union member state - with the guidance now specifying previously unclear issues, such as how indirect bond holdings should be accounted for.
The Pensions Board also announced that funds would be granted a further year - until 2023, rather than 2022 - to clear existing deficits, likely a result of the government's pledge to grant the industry an 11 year window.
Minister for Social Protection Joan Burton announced the reinstatement of the funding standard in October last year, but as the revised legislation was delayed, the Pensions Board was forced to hold off on the publication of its guidance.
DB schemes will now have until the end of the year to submit new funding proposals, with the regulator's chief executive Brendan Kennedy saying all information needed to complete the proposals is now available.
"It is now up to trustees to familiarise themselves with their obligations, and to prepare and submit proposals which will put the finances of their scheme on a long-term stable footing," he said.
"Defined benefit pension schemes have made long-term undertakings to their members," he added. "Our objective must be to see as many defined benefit schemes as possible put on a secure footing and prudently managed so that the members receive the pensions they are expecting."
In an effort to answer any questions trustees may have, the Pensions Board has also scheduled three seminars for the end of June, explaining the guidance in detail.
The Social Welfare and Pensions Act was widely criticised when published, as it was passed into law within a matter of weeks despite many in the industry raising concerns that it granted the minister for social protection powers akin to a blank cheque - as Burton or her successors would be able to increase the minimum funding levels by ministerial decree.
Increased funding requirements have been viewed as dangerous by some, as Irish companies currently do not have legislation that binds them to their occupational pension scheme - allowing them to walk away from the fund without notice.