IRELAND - The Irish government plans to use assets from the €24bn ($32bn) National Pensions Reserve Fund (NPRF) to support the government bond market and infrastructure investment, the National Recovery Report has confirmed.
The government intends to launch a four-year ‘solidarity' bond which pays an annual fixed rate of 1% with added bonuses up to 50%, provided pension funds are invested for a longer time. The bond has a similar structure to the ten-year bond, paying a coupon each year and a bonus for investors who hold the bond to maturity. The ten year solidarity bond has raised €300m since its launch in May 2009.
Plans also include using assets from NPRF and other private investors for infrastructure investment, the report showed. The move was first outlined earlier this month in the Irish Congress of Trade Unions' pre-Budget report. (Global Pensions: November 4, 2010)
"The initiatives outlined give an opportunity for the Irish public and pension funds to contribute to funding the national debt. As a consequence of these measures it is expected that there will be a significant increase in the domestic ownership of Irish Government debt in the near future," yesterday's report said.
There are also plans to introduce a reformed pension scheme for new entrants to the public service reducing their pay by 10% and a pension deduction for public service pensioners to yield €100m in savings.
In other news, Ireland's Pensions Board could reveal a deadline for filing funding recovery plans in January and trustees should use this time to evaluate their long-term risks and costs, chief executive Brendan Kennedy said.
In October, the Pensions Board extended the recovery plan deadline because of an ongoing review of Irish defined benefit plans. He said the Board cannot reveal the deadline until the details of the government's plans are clear, but revised dates could be available as early as January.
"When the funding standard deadline is announced, the time allowed to trustees will be as short as is reasonably possible. It is therefore important that trustees use the time they have available now to think about the management and the future of their schemes," he said, speaking at the Irish Association of Pension Funds Trustee Forum yesterday.
Three out of four of all defined benefit schemes in Ireland are currently underfunded.
The Pension Protection Fund’s (PPF) compensation cap and restrictions on annual indexation increases could be at odds with EU law, according to a provisional judgement by the Court of Appeal.
The Financial Reporting Council (FRC) has launched investigations into the conduct of a number of individuals involved with various Guinness Peat pension schemes between 2004 and 2012.
The Pension Protection Fund has announced the changes it will consider making to the Experian insolvency model for the 2018/19 levy ahead of the formal consultation.
The review of automatic enrolment (AE) in 2017 is an opportunity to think more strategically about pensions says Tim Sharp.