Ignoring the elephant in the room
The Social welfare and Pensions (Miscellaneous Provisions) Bill 2013 was announced by the Minister for Social Protection, Joan Burton TD on 22nd May 2013. The main pension provisions of the Bill were:
- The Pensions Board will change its name to Pensions Authority and its governance is to change. The Pensions Authority will consist of an independent chairperson appointed by the Minister for Social Protection and 2 ordinary members, one nominated by the Minister for Social Protection and a representative of the Minister for Finance.
- A new Pensions Council will be established. The Pensions Council will have a purely advisory function. The Pensions Council will consist of:
- A chairperson;
- A representative of the Minister for Social Protection;
- The Pensions Regulator;
- A representative of the Central Bank;
- A representative of the Department for Public Expenditure and reform; and
- Up to 8 other members who the Minister for Social Protection considers to have the relevant skills, specialist knowledge, experience or expertise to enable them to carry out their functions under the Pensions Act.
- The name of the chief executive of the Pensions Board will be changed to the Pensions Regulator and s/he will be a member of the Pensions Council.
- The Pensions Board will be given the power to wind up a pension scheme where the scheme is underfunded and the trustees and employer are not in a position to adopt a funding proposal, and where the trustees of the scheme fail to comply with a section 50 direction to restructure scheme benefits.
- The introduction of a provision for an appeal to the High Court on a point of law following such a direction from the Pensions Board, or following a direction from the Pensions Board regarding a Section 50 order to reduce benefits “made other than on application by the trustees”.
While the above changes to the governance and oversight of pensions are largely welcomed, what is disappointing is that the Bill does not include the much promised proposed reform to the priority order rule, i.e. the order in which assets are distributed when a defined benefit pension scheme is in wind-up. With a deadline of 30 June 2013 for the submission of funding proposals, for many schemes the decision not to address this issue in this Bill would seem to be a missed opportunity to reinstate some fairness between members of defined benefit schemes.
The reason given by the Minister for not dealing with this issue is the recent Waterford Crystal case in which the EU ruled that the Irish government had failed to implement the EU Directive requiring governments to provide protection for scheme members where the employer was insolvent. While it is of some relevance, the feeling is that this is just an excuse for the Minister failing to grasp the nettle of pension reform.
Written by Niamh Quirke
Independent Trustee Limited
*Please note this content is the view of the author and not of Independent Trustee Company