Many Pension Funds Face Collapse Says Govt Memo
ELAINE EDWARDS and CHARLIE TAYLOR
A confidential memo to Government from Minister for Social and Family Affairs Mary Hanafin said more than 90 per cent of defined benefit schemes are expected to report a deficit to the Pensions Board.
Workers’ pension schemes face a deficit of between €20 and €30 million over the next six months, according to Ms Hanafin’s memo.
It predicts the public collapse of a number of schemes over the next six months and warns that it would be impossible for the Government to pick up the shortfall because of budgetary constraints - no matter how strong the pressure might be.
The contents of the leaked memo were reported in the Sunday Tribune .
Commenting on the memo, Taoiseach Brian Cowen said: “Obviously the Minister for Social and Family Affairs will be engaging with the pension industry to review their funding arrangements and work with them in the coming months on long-term strategies.”
Many employers have moved in recent years to defined contribution schemes, which do not guarantee a fixed sum on retirement because workers bear the risk of stock market fluctuations.
Responding to today’s newspaper report, Ms Hanafin said: “These are turbulent and difficult times for money markets where most pension funds are invested. Pension fund managers have yet to report on their funding standards to the Irish Pension Board, but in public comments they have indicated that funds are subject to market fluctuations.”
The employers’ body Ibec said this afternoon [….] that a number of schemes had the potential to wind up over the next 12 months.