IRELAND - Overly rigorous regulation of underfunded pension schemes is not in the best interest of members, warns Gerry Ryan, chairman of the Irish Association of Pension Funds.
Addressing the association’s annual dinner in Dublin last night, Ryan also said the Social Welfare & Pensions Bill 2005 had not sufficiently addressed the pension deficit problem and that implementation in its present form would lead to further erosion of defined benefit schemes.
This week Mercer Human Resources Consulting released figures which put the collective pension deficit of Ireland’s top 10 companies at e3.3bn.
“While we welcome the changes which have been included in the Bill, we suggest that more needs to be done to ease the pressure on employers and trustees of defined benefit schemes,” Ryan said. “We recommend additional changes… these include the potential introduction of a state backed annuity scheme and a revision to the current annual certification process whereby if a funding proposal is agreed then it should apply for three years rather than being subject to annual review.
“We believe this latter change to be appropriate in the volatile environment which we have at present.”
Ryan added that it was important for national competitiveness that pension schemes were not required to fund at a higher rate than necessary and thereby absorb capital which could be used more efficiently.
He urged incentives be introduced to divert some of the SSIA savings into pensions provision.
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