Joan Burton, minister for social protection,
announced on Tuesday plans for retirees to share the risk with the employed when
an underfunded Defined Benefit (guaranteed payout) pension scheme is wound-up or
At present pensioners can receive all or almost
all the pension fund and the members who have contributed but not retired,
receive considerably less than expected.
The new provisions will apply to 80,000-85,000
people who are still members of defined-benefit funds. It will not apply
retrospectively to schemes wound-up.
Where the scheme is insolvent and where schemes
are being restructured, trustees will have to ensure pensioners get €12,000. Any
reductions over that amount will be limited to 10% for pensions up to €60,000.
Where both the scheme and the related employer are insolvent, the new rules will
allow trustees to reduce the pension in half, but only for amounts over €12,000.
In this situation, a person getting €20,000 a year from a scheme could lose up
Burton said Michael Noonan, finance minister, has
agreed to provide funds from the pension levy to meet any obligations on the
State that may occur arising from such double insolvencies.
Maeve McElwee, Ibec head of industrial
relations and human resources, said: "The current rules are desperately
unfair. If a scheme collapses, a person one day short of retirement can have
their entire pension wiped out, while a person who has just retired retains 100%
of their benefits. The proposed change will ensure that the assets of insolvent
schemes are distributed more fairly. Existing pensioners will still have
considerably more protection, but people of working age will receive a greater
proportion of the scheme’s assets."
Half of Ireland's workforce have no occupational pension
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