Irish Pensions Bill detrimental for DB scheme employers - Ibec
Written by Talya Misiri
The Social Welfare and Pensions Bill will be detrimental for employers seeking to maintain their defined benefit pension plans, Ibec has said.
According to the Irish business and employer association, if the Bill is implemented in its current format, companies operating DB schemes could be penalised, The Irish Times has reported. While the legislation aims to preserve a sustainable level of retirement savings for those in DB plans, Ibec believes that it could accelerate the closure of such schemes.
The proposed Bill suggests that employers with DB scheme may have to include these pensions as liabilities on their balance sheet. As a result, companies may struggle as liabilities will be extended on their company accounts.
According to Ibec, there are currently less than 700 DB schemes operating in Ireland that could be affected and forced to close.
Ibec director of policy and public affairs Fergal O’Brien referred to the UK where similar legislation is in place and emphasised the negative impact it could have on these schemes. He said that the change could even cost jobs as companies’ ability to borrow will be lessened.
“Ibec shares the Government’s ambition to protect scheme members, to encourage employers to ensure that schemes are well-funded and to prevent employers who “won’t pay” as opposed to those who “can’t pay” from walking away from the schemes they sponsor”, O’Brien told an Oireachtas committee on Thursday.
“However, we are also cognisant that it can be very difficult to put forward legislative proposals which have the desired effects without any negative implications.”