IRELAND - The Irish government faces hostile questions from the private pensions sector over the apparent double standard on compliance and regulation.
Whereas the recently published Social Welfare Bill 2005, which includes changes to theFunding Standard, applies to private sector pension funds, public sector pensions and some quasi state pension funds are exempt from the Standard.
At the end of 2003, there were 1,541 pension schemes in Ireland, taking in 230,000 members which are subject to the Funding Standard. A further 85 schemes, containing almost 250,000 employees, are exempt from the requirement to meet the Standard because their members are employed directly or indirectly by the state.
“The public sector has a derogation from these funding standards and aren’t even funded,but have higher guarantees and benefits,” added one industry source.
The environment for defined benefit pension provision in Ireland is becoming increasinglyonerous. In particular, the requirement for an annual submission of a funding proposal to the Pensions Board is widely disliked. In relation to amendments in the Social Welfare Bill2005 on the Funding Standard, one source commented: “The problem is the Standard hasbecome more onerous and the liabilities have increased so significantly because of the bond yields and the cost of annuities.
They [government] ignored it and went for security.”
While the Funding Standard is inappropriate for unfunded schemes, there are also a number of funded schemes in the public sector which are exempt.
But the degree to which the government is the guarantor is unclear. “Implicitly you couldargue that by having these funds exempt, then the government is implicitly saying thatthey are standing behind them, but they will never put that in writing” said one source.
The Department of Social and Family Affairs was unavailable for comment at the time ofpress.
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