Pensions Authority to act on Defined Benefit schemes that fail to meet statutory funding standard
Issued : 17 September 2014
According to the Pensions Authority, as of Septmber 12, there are 61 defined benefit schemes which are non-compliant with the funding standard laid down in the Pensions Act. The Authority will shortly begin to take action on these schemes. The Authority recognises the serious nature of its legal powers and the impact their exercise may have on members’ benefits. However, the Authority must ensure that the funding standard is adhered to and cannot permit persistent non-compliance in this area.
Where the Authority proposes to issue a direction under Section 50 or 50B of the Act, all members (actives, deferred and pensioners) will be afforded the opportunity to make submissions to the Authority. Scheme members who have concerns about the funding status of their scheme should in the first instance contact the trustees of their scheme.
The Authority strongly encourages trustees of such schemes to accelerate their own efforts to find a solution to their funding deficit without Authority intervention.
The Pensions Regulator, Brendan Kennedy said: “Reducing benefits or winding a scheme up is a very serious step which is only taken reluctantly. However, unless a sustainable recovery plan is put in place, an underfunded scheme is unlikely to be able to pay the benefits promised to scheme members. The younger members are at particular risk not only of getting less than full benefits, but of losing the contributions they may be making into the scheme.”
A link to the relevant regulations is provided here: http://www.irishstatutebook.ie/pdf/2014/en.si.2014.0392.pdf
Background: On 2 September 2014, Tánaiste and Minister for Social Protection, Joan Burton T.D. signed Regulations issued under Section 50 and Section 50B of the Pensions Act. These Regulations set out the information and notification requirements that must be carried out by scheme trustees before the Authority issues a direction under Section 50 or Section 50B of the Pensions Act.
Sections 50 and 50B of the Pensions Act respectively give the Authority the power to direct trustees of defined benefit schemes to reduce benefits under a scheme or wind up the scheme. These powers may be exercised by the Authority where a defined benefit scheme fails to meet the statutory funding standard under the Act.