New Measures Announced To Support Workers In Pension Schemes

The Minister for Social and Family Affairs, Mary Hanafin T.D., has published the details of measures she is taking to support workers in defined benefit pension schemes.

These measures are being included in the Social Welfare and Pensions Bill 2009 which will be finalised in the Oireachtas this week.

In a major new development, a new Pensions Insolvency Payment Scheme (PIPS) is being introduced to assist employees and former employees of companies where the employer becomes insolvent and the defined benefit pension fund is in deficit.

Under the scheme, the scheme trustees can pay a sum to the Exchequer to cover the cost of paying the pensions of retired members, instead of buying annuities. 

Savings will then be put towards the pensions of those yet to retire, thereby reducing, to some extent, pension shortfalls.

PIPS is intended to be cost neutral from an Exchequer point of view. Finance Minister Brian Lenihan said "I am bringing forward a Pensions Insolvency Payment Scheme to address the problems being faced by people who have seen their employer become insolvent and their pensions reduced.  The scheme should go some way towards reducing those losses in a way that is cost-neutral to the Exchequer."

Announcing the measures, Minister Hanafin said "we are in a situation where defined benefit schemes are being wound up and some employees and former employees are ending up with less than they are due. I want to make it easier for people to get more.

"This new Government scheme will provide for pensions at a lower cost, leaving more funds available for those who have yet to retire."

The National Treasury Management Agency will be delegated powers by the Minister for Finance to price the cost of purchasing pensions on a not-for-profit basis.