Bill not to apply to wound-up pensions
Legislation cannot be retrospectively applied to funds already in trouble
New legislation to be published today to address problems with defined benefit pension schemes cannot be retrospectively applied to funds that have run into difficulty.
The proposals are contained in the Pensions (Amendment) Bill 2013, which was advanced by Minister for Social Protection Joan Burton, and have been drafted in order to meet Ireland’s obligations under the EU insolvency directive.
The group of workers took the case against the State for the loss of their pensions after the company went into receivership in January 2009. At the time of the company’s insolvency, the workers were told they would receive only between 18 per cent and 28 per cent of their full pension entitlements.
The Luxembourg-based court ruled that offering retirees half of what they had been promised under a defined benefit scheme did not amount to protection by the State.
It dismissed arguments by the State that the economic situation in Ireland justified a lower level of protection than might otherwise have been required.
The new measures will not apply to wound up schemes such as that in the Waterford case, which has returned to the High Court in Ireland to decide what level of cover the Government will have to provide.
Some industry figures have said the bill could be in the hundreds of millions.
A Department of Social Protection source said the move was not prompted by looming difficulties in specific schemes but rather the Bill was introduced to “provide for something that might not happen”.
The source said the Government had worked closely with the Office of the Attorney General to ensure the Bill was robust and would not be liable to successful challenges in the courts.
The Bill also includes measures designed to prevent defined benefit schemes from becoming severely underfunded.
The Pensions Board will be entitled to refuse to accept proposals from schemes that are less than 50 per cent funded, impose obligations to ensure underfunded schemes achieve a base level of 60 to 70 per cent of funding, and to withdraw flexibility when proposals go “off track”.
The legislation was approved at Cabinet yesterday morning. It is to be published today, brought before the Oireachtas next week and enacted by the end of the year.