38,000 leave occupational pension schemes
SOME 38,000 people left occupational pension schemes over the past year as the recession continued to bite, the Pensions Board said yesterday.
According to its annual report, the total number of active members in occupational pension schemes in April this year was 771,878, a decline of 38,083 members over 2010 levels.
Speaking at the publication of the report, board chairwoman Jane Williams said such a decline was a “serious concern” for the organisation, given the importance of personal savings to provide for retirement in addition to the State pension.
Launching the report, Minister for Social Protection Joan Burton said the recent reintroduction on June 7th of a funding reserve for defined benefit schemes will see all schemes examine their positions closely, but she hoped “the vast majority will be able to develop realistic proposals to rectify their funding positions”.
However, Brendan Kennedy, chief executive of the board, said some defined benefit schemes will be forced to close because they cannot meet their funding standard as a result.
“Unfortunately some schemes will close,” he said, adding it was as yet unclear how many will do so.
Defined benefit schemes have until December to submit funding proposals on how they will tackle their deficits and will have 11 years to make up the deficits.
At present, up to 80 per cent of such schemes are in deficit “and in a number of cases the deficit is substantial”, Mr Kennedy said.
“It is now up to trustees to prepare and submit proposals which will put the finances of their scheme on a long-term stable footing,” he said.
The initiative to allow pension funds to invest in Irish sovereign annuities was an option for pension funds, he said, but “it’s not part of our remit to drive funds into Irish Government bonds”.
According to its report, the board prosecuted 26 pension cases last year. A further 36 cases were pending for this year.
Independent TD Mick Wallace was one of those fined for not paying his construction workers’ pension contributions on time.
The board also fined seven trustees of three schemes.
In April, the OECD commenced its review of long-term pensions policy in Ireland.
Ms Burton said it will start its consultation process next month, with a view to completing the report by the end of the year.