Irish pensions watchdog to tackle ‘persistent’ breaches of funding standard

first_imgIreland’s regulator has warned more than 60 local defined benefit (DB) funds that it cannot allow “persistent non-compliance” with the funding standard to continue.The Pensions Authority, which under recent regulatory changes has the ability to direct the wind-up of schemes in deficit, said it was “strongly” encouraging the trustees of the affected funds to take action and address underfunding.It said “persistent non-compliance” with the funding standard could not be allowed and that it would shortly begin dealing with those in breach of rules.The minimum funding standard, formally reinstated last summer, requires trustees to file recovery plans if in deficit, either outlining how shortfalls can be addressed through investment returns, or by reducing benefits. Several weeks after the 30 June deadline last year, 70% of funds, or 212 schemes, had failed to submit a formal proposal, a figure that fell to 120 a few weeks later.As of April, the regulator said around 50 had yet to submit funding proposals.However, figures released by the Authority showed that, as of 12 September, 61 schemes were still in breach of the funding standard.Brendan Kennedy, head of the regulator, noted that cutting benefits or winding up schemes were “very serious” steps 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,” he said.“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.”Under new regulation drafted by the Department of Social Protection, trustees of schemes informed that the regulator may force the wind-up of the fund need to inform all members.The Occupational Pension Schemes regulations (Section 50 and 50B) also said the Authority should be sent a funding certificate, the fund’s annual return, information on the scheme’s long-term sustainability and “such other information as the Pensions Authority believes is necessary” to allow it to make a decision.The regulation came into force at the beginning of September.last_img read more