Ibec condemns Government for inaction on pensions
Business group says many schemes will be forced to close
Recent changes had increased the costs of pension provision, according to Brendan McGinty, director of industrial relations and human resource services at Ibec. Photograph: Dara Mac Dónaill
Two hundred thousand private sector workers have been badly let down by successive governments’ failure to face up to the need for positive reform of pensions policy, a conference will be told this morning.
Recent changes had increased the costs of pension provision, Brendan McGinty, director of industrial relations and human resource services at Ibec, says. Many employers and members of pension schemes “simply cannot afford these increased costs”, leading to the prospect of reduced benefits and scheme closures.
The possibility of a new levy to protect the rights of workers in collapsed pension schemes “taken together with a series of other unhelpful pensions policy decisions adds greater pressure on scheme sponsors to withdraw their support from DB [defined benefit or final salary] schemes, Mr McGinty says.
As 80 per cent of defined benefit schemes submit recovery plans to the regulator, the Pensions Board, this week, he condemned the “artificially high requirements” imposed by Government on pension funding and warned that several schemes will be forced to wind up each week in the absence of reform.
The conference, timed to coincide with the deadline for funding proposals, will hear of concern at Government failure, despite assurances, to address the priority order on wind up of a pension scheme, which can see someone left with no benefits just months before retirement while retired colleagues receive their full benefit.
Ibec says it is pushing for change that would still give “absolute priority” to retired people on modest pensions but would require those on higher pensions to bear some of the costs of a scheme collapse.
Mr McGinty will also attack the pension levy, imposed by Minister for Finance Michael Noonan, as a “simple cash grab”, likening it to the expropriation of bank deposits by the Cypriot government in the recent bailout.