Burton declines to rule out further levy on pensions
Pensions Board chief says it is clear a number of schemes will close down
Chief executive of the Pensions Board Brendan Kennedy, Minister for Social Protection Joan Burton TD and chairperson of the Pensions Board Jane Williams at the publication of the Pensions Board Annual Report and Accounts for 2012
Minister for Social Protection Joan Burton yesterday declined to rule out a further levy on pension schemes.
The minister was answering questions on the financial implications for the State of meeting the cost of a recent European Court of Justice ruling that the State had not adequately protected the pension rights of workers in collapsed companies since 2007 – most notably about 1,700 staff at Waterford Crystal.
The issue of how much compensation those workers should receive is now back before the High Court.
“It’s not possible for me to pre-judge, nor is it appropriate to pre-judge, what decision the courts will arrive at but I think it will be a very significant and important judgment,” she said, and would have “consequences” for the Exchequer.
Asked if she would rule out a levy, she said: “I don’t think you can rule out anything in relation to this particular case until the courts have made their decision.”
The Minister was speaking at the publication of the annual report of the Pensions Board, the regulator for the €70 billion sector. Board chief executive Brendan Kennedy said that there had been no overall improvement in the position of defined benefit pension schemes during 2012, despite “generally good” investment returns.
At the end of 2011, the Society of Actuaries calculated that the aggregate hole in Irish defined benefit pension schemes was €16 billion.
The report says that 760,620 people are now members of occupational pension schemes, down 13,744 on the previous year. Of these 338,037 are in 107 public sector defined benefit schemes, 189,644 are in 963 private sector DB schemes and 232,939 are members of 60,192 defined contribution schemes.
Mr Kennedy said it was clear a number of defined benefit pension schemes were going to close down but he did not know how many.
“The sponsoring employer and the trustees and the member representatives are faced with very difficult decisions and some of them have been putting off the decisions as long as they can,” he said. “The [June 30th] deadline [for submitting recovery plans] is now coming. For any particular defined benefit scheme, whether or not that scheme is going to be able to continue depends not just on the financial situation of that scheme but the ability of the employer and the members to make additional contributions or to agree cuts in benefits.”
Mr Kennedy said the regulator “continue to have concerns about the understanding that some defined benefit trustees have of their role and responsibilities”.
He was also concerned about the growing defined contribution side of the business, including the adequacy of contributions and the costs incurred by smaller schemes.
“Ireland has more small , and especially single member, schemes than any other country in Europe and too often, this results in poorer value for money and lower standards of governance,” he said.