IRELAND - The Irish government has been urged not to take a 'payment holiday' from contributions into the National Pension Reserve Fund (NPRF) due to the worsening economic outlook.
Philip Shier, an actuary with Hewitt and president of the Society of Actuaries in Ireland, said: "It would be surprising if the government wasn't looking at all options given the economic outlook, including a contribution holiday, but it would certainly be disappointing if they did."
While the Irish economy has been booming in recent years, the global economic downturn has led to a budget deficit, which has lead to the possibility NPRF funding could be temporally suspended.
Sources close to the matter have confirmed to Global Pensions the government is considering possible legislation to allow a contribution holiday.
Shier said if the government did press ahead with a payment break, it would set a dangerous precedent for the future, whereby any economic difficulties could be used as an excuse to take a payment holiday.
"It would be very unfortunate if such a precedent were established," he added.
Philip Lane, professor of international macroeconomics and director of the Institute for International Integration Studies at Trinity College Dublin, warned: "The most important thing is to have fixed conduct rather than to decide at the first sign of difficulties to abandon that. If you're going to write a contribution into legislation you should stick to it.
"The government is now running a budget deficit and faces the criticism of having to borrow money in order to pay into the fund."
A spokesperson for the Department of Finance said: "There's a lot of talk about what may happen, but no confirmation at all so far. All you're hearing is speculation in the run up to the Budget.
"It's not as if the government can say 'we're going to take a break of one year or two years', it would need a change in the law," he said.
The NPRF said the fund was "not aware of any such plans" for a contribution break, and declined to comment further.
According to the latest financial results, the NPRF lost 12% of its value over the first half of the year, bringing total assets to EUR19.4bn (US$29.7bn).
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