Policy and regulatory failures have resulted in significant losses for hundreds of thousands of pension scheme members and seriously eroded confidence in the principle of pension provision, the Irish Congress of Trade Unions said today (March 5).
Addressing a hearing on pensions at the Dail Joint Committee on Education & Social Protection, Congress official Fergus Whelan said: 'throughout the pensions crisis - which began before the financial crisis - the state and pensions regulatory system failed pension scheme members. At times both appeared to be actively working against the best interests of scheme members.
'those who are responsible for directing public policy on pensions and getting us into this mess - successive Governments, public officials, and the highly paid doyens of risk management orthodoxy - got it totally and utterly wrong. Yet they suffer no consequences.They keep the Rolls Royce pensions," he said. Among the policy and regulatory failures he cited were:
- Government and the Regulator clung resolutely to a funding standard that artificially overvalued liabilities;
- The Government levies on pension schemes - a confiscation of pension savings - served to undermine schemes at the worst possible time;
- Regulatory failure encouraged "a flight from Defined Benefit Schemes" and resulted in heavy losses for members.
'the burden of their failure is borne by workers and former workers. Most workers who have lost out have so far borne their losses stoically. Perhaps this is because they feel no immediate pain," Mr Whelan said.
"But in a decade hence when workers, who contributed huge amounts of income to their pension, are sunk in poverty, the pension time bomb may finally detonate," Mr Whelan told the Joint Committee.
He said such had been the impact of the regulatory and policy failure that "few well informed workers believe their pension funds savings are safe."
Mr Whelan warned that many people close to retirement will 'slowly descend into poverty from the moment they retire...but if high inflation returns the fall into poverty will be rapid."
He welcomed stated Government plans to address the pensions crisis, but said it would not succeed without proper regulation.
"Congress is concerned that the term "pension reform" has become a euphemism to cover policy and regulation failure, the transfer of pension risk from employers to workers, and neoliberal attacks on social security provision for the elderly," he concluded.
