November 19, 2013
The Government has announced plans to reform the distribution of funds for defined benefit pension schemes which are in financial trouble.
At present, when an underfunded defined benefit scheme is wound up or restructured, existing pensioners are receive all or most of their entitlements, but members who have not yet retired could end up getting nothing. [EXPAND Read more]
Under new plans the money left in a pension fund will be distributed more evenly.
Minister for Social Protection Joan Burton said that any costs incurred will be covered by funds from the Pension Levy and will bring Ireland in line with the European Union’s Insolvency Directive.
According to a statement from the Department of Social Protection, the Government will offer guaranteed protection to a level of 50% for pensions in cases where a company and scheme becomes insolvent.
Pensions worth €12,000 or less will be completely guaranteed under the scheme.
In cases where the pension scheme alone becomes insolvent – or is being restructured – the rules will be changed so that existing pensioners are not given absolute priority over those that are still working.
Business group Ibec has welcomed the planned change, describing the current system as “desperately unfair.” [/EXPAND]