Use of pension to reduce debt is rejected
DISTRESSED MORTGAGES:AN ADVISORY group in the Civil Service has recommended against allowing distressed mortgage-holders to apply pension savings to reduce their indebtedness.
The economic management council had asked the Department of Public Expenditure and Reform to examine the idea as a possible means of alleviating debt problems faced by householders. The council consists of Taoiseach Enda Kenny, Tánaiste Eamon Gilmore, Minister for Finance Michael Noonan and Minister for Public Expenditure and Reform Brendan Howlin.
The ad-hoc group which carried out the analysis was chaired by a representative from the Department of Social Protection.
The group found no evidence that those most likely to be affected by mortgage debt would have enough pension savings to make a difference to the loan taken out to purchase their residence.
Persons in this category would generally be younger house-buyers with, as yet, relatively little put by for their pensions. There would also be taxation issues involved.
Last Friday, the ad-hoc group presented its findings to the 10- member body of civil servants and bank representatives, which is expected to deliver a report on mortgage arrears and other forms of personal debt by the end of this month.
The body is headed by Declan Keane, a KPMG accountant seconded to the Department of Finance, and includes officials from various Government departments, the Central Bank and general banking.
Figures released last week showed the level of arrears rose to a new peak of almost 9 per cent in July based on a sample of €55 million of Irish residential mortgages.
Credit rating agency Moody’s said arrears of 90 days or more in a pool of mortgages, which accounts for almost half of the State’s mortgages, rose to 8.78 per cent in July from 7.62 per cent in April.
This is a further sharp deterioration since the Central Bank said last month that arrears had risen to 7.2 per cent in June.