EUROPE - The Irish pensions regulator, the Irish Pensions Board, is relaxing its rules on pension fund shortfalls.
Under normal circumstances a pension fund must submit a proposal to ensure that any unfunded position shown by an actuarial review is made good by the time of the following actuarial review in three and a half years’ time.
In exceptional circumstances the Board agreed to allow pension funds to up to 10 years to get back to a fully funded position, a deadline it is now willing to consider extending.
This applies only if the underfunding is solely due to poorly performing markets, and will be considered on a case by case basis..
The Irish Association of Pension Funds has welcomed this greater flexibility. Gerry Ryan, chairman of the IAPF commented:
“The problem associated with setting a short time frame for funding deficits in some pension schemes is that sponsoring employers may be fully committed to maintaining the pension benefits proposed for employees but unable to increase contributions to the levels necessitated by short-term funding requirements.
He added: It is clear from the guidelines issued by the Pensions Board that employers will still be required to fund their pension schemes prudently and that trustees will be obliged to keep members informed of solvency issues. It is also clear that extensions will only be granted where a strong case can be made that any such extension is necessary or appropriate and not contrary to the interests of members.
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