IRELAND – Ireland’s Pensions Board only received funding proposals from one-third of the country’s affected defined benefit (DB) schemes by last month’s deadline, the country’s minister for social protection has said.
According to Joan Burton, 300 DB funds should have submitted proposals to the Board by 30 June to show how they would address pension deficits.
However, more than 70% – or 212 funds – failed to meet the deadline, the Labour TD told the Dáil last week.
“The Pensions Board has, by now, formally written to the schemes that have not submitted funding proposals to ascertain their particular circumstances,” Burton told the lower house.
She added that the regulator would now decide – on a “measured basis and taking account of the individual scheme circumstances” – how to proceed with those that failed to comply.
This suggests the Board will not seek to wind up schemes immediately, following amendments in May allowing it to do so where schemes fail to submit proposals.
Burton noted that a number of funds had made clear they would be submitting proposals shortly and said there had been an “unfounded” expectation that the Board would for a third time postpone the submission deadline.
Consultancy LCP had previously called for the submission deadline to be delayed once again after Burton’s Department of Social Protection unveiled a number of measures at the end of May that would allow DB funds to offset future risk reserve requirements with corporate bonds.
The government also lowered the risk reserve requirement, effective 2016, to 10%.
However, as schemes in deficit were required to submit proposals only a month later that would address how they would meet the 10% requirement, the consultancy argued in favour of a new deadline despite the changes overall being seen as positive.
In a separate parliamentary question, Burton said Irish DB schemes had been experiencing “persistent” funding difficulties, but added that social partners and trustees had been making “strenuous” efforts to protect individual schemes’ future viability.
“While trustees and employers will explore a range of options to secure the sustainability of pension provision, some schemes will wind up,” she said.
She added that the priority order of assets upon wind-up was an issue that had been “examined in some depth” and was currently under consideration by the department.
But she gave no indication of changes to the order being imminent.
“I am keeping the situation under review,” she said, “and will report back to the government in the coming months on these issues.
“Legislative proposals and additional reforms will be considered at that stage.”
Unions and employers alike have backed changes to the priority order, but experts have claimed such changes would need to be reconsidered in the wake of a European Court of Justice ruling that found the Irish government’s failure to protect pension benefits was a “serious breach” of its duty as an EU member state.