IRELAND - The Irish government's tough stance against funding semi-state pension schemes with deficits has softened, as the minister for finance indicated that the government would back the schemes in the event of obligations not being met.
Speaking in the Dail on Wednesday, the minister for finance Brian Cowen, said that he “will ensure that the funds concerned are in a position to discharge their obligations.”
Global Pensions first raised the question with Richard Bruton TD, deputy leader and spokesperson for finance for opposition party Fine Gael last week, who subsequently put the question to the minister during parliamentary question time.
Last week Global Pensions exclusively reported that the department of finance is reviewing the possibility of transferring the assets of the non-commercial semi-state schemes to the National Treasury Management Agency for management.
Such schemes potentially include those of the Irish Development Authority, the Shannon Development Authority and Enterprise Ireland.
In the past, the department for finance has always ruled out the possibility of underwriting semi-state schemes in deficit, even in cases of part-privatisation.
But the minister’s comments point to the government’s will to see both commercial and non-commercial semi-state pension schemes’ obligations met.
Bruton said that he was surprised that the minister had not, as in past, strenuously denied any government move to fund such schemes.
He said: “It is surprising that he hasn’t reiterated the stand taken on this matter by his predecessor who said that any such move would contravene EU rules. This could indicate a softening of stance and the question that we will have to pursue is what this means for schemes such as Aer Lingus.”
Responding to question of whether the department for finance is looking at transferring the assets of non commercial semi-state pension funds to the National Treasury Management Agency, Cowen said: “As regards the National Pensions Reserve Fund, the deputy will be aware that the relevant statutory provisions governing this fund provide that the purpose of this fund is to ensure that resources are available for the longer term pension needs. The question of any short-term needs in particular pension funds is a separate matter for the organisation and the minister concerned.”
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