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IPB chief executive Brendan Kennedy. Sasko Lazarov/Photocall Ireland

Pensions board chief warns fund trustees of legal action

Irish Pensions Board also says it is concerned by the drop in membership of occupational pension schemes.

PENSION FUND trustees could face legal action if they are found to be in breach of their duties, the Irish Pensions Board chief executive Brendan Kennedy has warned.

Last year, the IPB successfully prosecuted 26 cases and is currently involved in 36 others. Meanwhile, seven trustees of three pension schemes paid fines totalling €14,000 in 2011.

Speaking at the launch of the IPB annual report, Kennedy said that the Board “will have no hesitation” in taking appropriation action – including prosecution – in cases of non-compliance with the Pensions Act.

“In recent years prosecutions have almost entirely been where employers have deducted contributions from employees’ wages and not passed them on to the pension scheme, that is, they kept them,” he explained.

He said that the IPB is concerned about the high volume of cases notified to the Board and says that that it is aware of “a number of cases where offending companies have been put into liquidation and the same directors immediately start a new business and continue their deductions and failure to remit”.

Pensions

Also speaking at the report’s launch, IPB chairperson Jane Williams voiced concern over the fall in occupational pension scheme membership.

Although a fall is expected given contractions in the economy, she said that “it is of serious concern for the Board given the importance of personal savings to provide for retirement in addition to the State pension.”

The IPB report shows that the total number of active members in occupational pension schemes at April 2012 was 771,878 – down 38,083 members since 2010.

The number of PRSA contracts in force increased by 10,924 during 2011 to 198,038 with total assets of over €3 billion (up €0.29 billion from the end of 2010).

CEO Brendan Kennedy also issued a warning on the level of deficits being seen across defined benefit schemes, saying that “as many as 80 per cent of defined benefit schemes are in deficit and in a number of cases, the deficit is substantial.”

Under a defined benefit scheme, the benefit entitlement is defined by reference to earnings, length of service, an index or a fixed amount and the contributor knows in advance what the value of their pension will be.

“The Board has published deadlines by which these schemes must submit funding proposals to tackle these deficits,” Kennedy said. “The first of these deadlines falls on 31 December 2012. It is now up to trustees to prepare and submit proposals which will put the finances of their scheme on a long-term stable footing.”

The chief executive added that one of the IPB’s objectives is to see as many of these schemes “put on a secure footing and prudently managed” as possible so that the contributors get the pensions they are expecting.

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6 Comments
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    Mute Conor Gallagher
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    Jun 23rd 2012, 10:18 AM

    What’s the government’s pension policy?n1. Rob 2.4% of private pension funds.n2. Spend all of the national pension reserve on banks (despite the demographic crisis).n3. Allow top earners defer tax with tax relief on pensions at the marginal rate.nMadness.

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    Mute mel
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    Jun 23rd 2012, 10:44 AM

    The public service pension fund has 5billion assets and 120billion liabilities however the same rules don’t apply here,surprise surprise!’
    This is a massive ponzi scheme with the rest of us paying the tab

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    Mute Neil
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    Jun 23rd 2012, 1:28 PM

    But everyone knows its unlikely those PS pensions will be paid at the rates promised. The money just won’t be there unless there is a massive increase in the working population. Future taxpayers just won’t stand for a situation where most of their taxes are going to pay for a comfortable retirement for a minority of the elderly. It’ll be hard enough to get enough taxes to support the majority of elderly who will have had no pension scheme at all.
    We will need an Ireland with 15million-plus workers in 20 years time to support PS pensions as currently promised.

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    Mute Brian D. Brady
    Favourite Brian D. Brady
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    Jun 23rd 2012, 12:45 PM

    If someone gives you money in good faith to invest in a pension scheme and you with hold that and use it yourself. Then you have STOLEN that money and should receive a criminal conviction, not a fine. This is what is wrong with our attitude toward white collar crime in Ireland, it is not seen as real theft, its as if its just a virtual crime.

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    Mute Rommel Burke
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    Jun 23rd 2012, 11:31 AM

    As with most things in this country we have a two tier pension scheme system. They work well for the high earners, company directors and those in defined benefit schemes (mainly Gov employees). This is due in the main to the rules being written to benefit those writing them.
    For the less well off pensions while being pushed every few years, as in the prsa campaigns, are little more than a costly channeling of peoples hard earned cash to the financial institutions who always win because they take a cut of every transaction along the way.
    When the taxpayer is bailing out bondholders you are effectively negating any tax relief received on your own past contributions and paying twice for something that may or may not even be there when you come to retire.

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    Mute james
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    Jun 23rd 2012, 11:14 AM

    Give me a job and i will certainly give it a thought.

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