Regulatory Updates
Defined Benefit Funding
October 2010
IAPF
The Minister for Social Protection, Éamon Ó Cuív TD, announced at the IAPF Annual Benefits Conference yesterday that the deadline of 30th November 2010 for submission of funding proposals was being further extended. This was to allow for the decision to bring forward the work on a new defined benefit model proposed in the National Pensions Framework. The Department aims to introduce this on 1st July 2010. The Minister also stated that thorough consideration is being given to the Sovereign Annuity proposal.
The IAPF have been highlighting the issues being faced by schemes and the difficult decisions trustees are having to make regarding benefits. The extension of the deadline at least removes the imminent threat to many of these schemes. There is a considerable amount of work that will need to be done to bring forward any alternative models and the IAPF will contribute to this process. The Pensions Board has now issued an update on what this means to schemes and has confirmed that the 30th November and 31st May deadlines have been deferred. Any schemes that have Section 50 or 49(3) applications with the Board will be able to withdraw these. The full text of the Board’s update is as follows:
- The Government has announced that work on the defined benefit aspects of the National Pensions Framework is to be brought forward and new legislation will be introduced no later than 1 July 2011. This work will look at issues regarding the governance of defined benefit schemes, the basis for the funding standard (including areas such as risk management, smoothing out effects of changes in the bond markets and strategies for transitioning schemes to a new defined benefit model.
- All defined benefit schemes in deficit currently have a deadline for submitting a proposal that falls between 30 November 2010 and 31 May 2011. As a result of the announcement, The Pensions Board has deferred the deadline for all schemes.
- The Board is not yet in a position to announce a revised deadline. The new date will have to take account of the legislative changes intended by the Government. It will also allow schemes time to prepare new submissions in the light of any changes.
- The Board will contact all schemes which currently have section 50 or 49(3) applications with the Board and ask them if they want to withdraw them.
- The Board will continue to consider any section 50 or 49(3) applications submitted to us in the coming months.
- The Board is keen to point out that it is important to remember that this hasn't changed the problems faced by defined benefit schemes, and that sooner or later difficult decisions will have to be made.
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