Fianna Fáil is to move swiftly in efforts to close a loophole in pensions law which allows solvent companies to leave pensioners in the lurch.
The party’s welfare spokesman, Willie O’Dea, has drafted an amendment to the 1990 Pensions Act which would make it harder for companies still doing business to wind up so-called ‘defined benefit’ schemes.
The key measure in the law change would empower the Pensions Authority to block the shutting down of pension schemes under certain conditions.
The initiative follows a number of controversies in recent times, including a move by Independent News and Media to stop contributions to its staff defined benefit scheme, which caused a political storm last month. Under the law change, the Pensions Authority would be able to oblige companies to make good deficits in the scheme before closing it.
“That would help pensioners get their entitlements and stop some worrying practices which were often profoundly unfair and risked leading to hardship,” Mr O’Dea said.
The draft law change is based on a similar law now in force in Britain. But it has been modified to take account of problems which have arisen in that jurisdiction in cases where companies’ solvency has been threatened by unduly harsh pension obligations.
Mr O’Dea said the modification would allow up to 50pc of the deficit to be paid up. He said this level of top-up could often prove sufficient to meet pensioners’ needs without jeopardising a company’s existence.
Mr O’Dea is also asking the Pensions Authority to investigate the prospect of setting up a central fund, via a levy on pension funds, to help top up pensions in cases of company insolvency. He is also seeking a report on how pension liabilities are calculated, amid claims that these are too onerous
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