The Irish government faces criticism over failure to reform rules governing the distribution of pension funds on the wind-up of a defined benefit schemes.

The Irish Business and Employers Confederation (IBEC) said previous statements by the government indicating change was on the way had led many to believe amendments would be incorporated within The Social Welfare and Pensions Bill published yesterday.

But the issue was not addressed. Under current rules, underfunded pension schemes are obliged to guarantee existing pensioners’ benefits by buying annuities if the sponsor enters liquidation. Members who have not yet reached retirement age will be left with only a small fraction of the pension they had expected, the IBEC said.

“A retired worker will have his or her full pension protected in a wind up, whereas a 64-year old worker, months from retirement may be left with little or no pension right at all,” IBEC director Brendan McGinty said.

The IBEC, ICTU, IAPF and the Society of Actuaries of Ireland have called for new rules to be implemented which could continue to give absolute priority to retired people on modest pensions, but require those on high pensions to bear a portion of scheme losses. The groups say this aims to ensure that those not yet retiring will save a reasonable portion of pension savings.

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