Clare Daly calls for commission on occupational pensions

Independent TD criticises winding up of defined-benefit schemes

Clare Daly  said a statutory order should be introduced precluding any further winding up or restructuring of regulated defined-benefit schemes until appropriate legislation was introduced.  Photograph: Brenda Fitzsimons

Clare Daly said a statutory order should be introduced precluding any further winding up or restructuring of regulated defined-benefit schemes until appropriate legislation was introduced. Photograph: Brenda Fitzsimons

 

Independent TD Clare Daly has called on the Government to set up a commission on adequate occupational pension provision.

She told the Dáil it should make recommendations “on securing fair, affordable and reasonable retirement benefits for workers, including more than one million employees who do not have a pension scheme and rely on the welfare system’’.

Ms Daly said a statutory order should also be introduced precluding any further winding up or restructuring of regulated defined-benefit schemes until appropriate legislation was introduced.

She was speaking during the debate on the Social Welfare, Pensions and Civil Registration Bill introduced by Minister for Social Protection Regina Doherty.

Ms Doherty said the wide-ranging Bill sought to offer greater protection to people who were members of defined-benefit pension schemes.

Until now, the Minister added, there had never been a statutory obligation on employers under Irish law to engage with trustees and members to address proactively deficits in their defined-benefit schemes, nor had conditions been put on employers, who wished to terminate their liability, to contribute to them.

“That will no longer be the case,’’ Ms Doherty added.

Ms Daly said there was a need to properly regulate defined-benefit schemes.

At the end of 2008, there were 1,271 such schemes, but this year there were just 628, with over 150,000 people removed from them in a decade, she said.

Hardpressed workers

“The industry and many employers are trying to eliminate them and replace them with defined-contribution schemes, which put all of the risk on the hardpressed workers,’’ Ms Daly added.

“It is unacceptable.’’

She said annuities had become very costly.

Less than 20 years ago, it would have cost approximately €130,000 to buy a pension of €200 per week, she added.

Today, it cost €270,000, a massive increase of 108 per cent.

She said those selling the annuities received 2 per cent commission.

“Even in the case of a small pension of €200 per week, the pension provider picks up a fee of €5,400 for a few hours’ work,’’ Ms Daly added.

“It is absolutely scandalous and unregulated.’’

She said low bond yields and interest rates, the higher expense of purchase of pensions, and the fact people were living longer, were undoubtedly contributing to difficulties.

But the elephant in the room was the funding standard for defined-benefit schemes which was quite simply mad, she said.

“The Pensions Authority works on the ridiculous principle that all of the schemes must have the money to pay out all pensions to active, deferred and existing pensioners today,’’ Ms Daly added.