Cantillon: Paying a heavy price for paralysis on pensions policy

Pensions industry must shoulder its share of the blame

 

An illustration of the ineptitude of government and its inertia when it comes to the issue of pensions came with the news yesterday that Independent News & Media has secured approval from the regulator to slash the benefits built up by its workers over as much as 40 years.

The Pensions Board gave approval for a pension rescue plan that will see workers surrender 39 per cent of the pension that they expected to receive under their employment contract. Think about that. Four out of every €10 euro that people expected to receive in retirement will not now be available to them.

This, remember, is a listed company which has every expectation of continuing in business far into the future, delivering profits to shareholder s – not some failed enterprise where workers are being required to take their pain alongside other stakeholders.

While it is true that the restructuring of INM will see others take a financial hit – the company’s bank lenders and shareholders who will be diluted in an imminent €40 million rights issue – they can recover those losses into the future. The pension promise in their contracts of employments meant staff generally made little alternative provision: for many it is now too late.

Part of the reason the company’s pension scheme found itself in this position is that over recent years, the regulator – whose role, ironically, is to protect members of such schemes – has effectively raised the bar on many pension schemes, making them unsustainable in practice if not in theory.

Others share the blame. Successive governments have substituted activity for action. The current administration has shown itself as adept as its predecessors in this regard. The Department of Social Protection is awash with reports on reform of the Irish pensions system. What they share is (i) a call for is fundamental reform and (ii) a plea not to longer-finger decisions in a sector where putting off the inevitable incurs considerable cost. The present Minister, like her predecessors, has chosen the path of political expediency.

The pensions industry must shoulder its share of the blame. For the money it charges, it has delivered little in the way of the required performance and has been slower than many international peers in adjusting to new realities.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.