Banks often extend loan contracts to avoid writing down losses on non-performing loans in what is described as “extend and pretend”. The Government, in its reluctance to address the problems of the pensions industry, has engaged in a similar exercise in prevarication and delay. The Social Welfare and Pensions Bill was expected to redefine who gets what and when, where insolvent defined benefit – final salary – schemes are wound up. The Government, however, chose not to do so – as yet.

The problem is pressing as four out of five defined benefit schemes are underfunded, and some may fail in the months ahead. However, retirees currently take priority over members still at work in the allocation of assets where a wind-up of the scheme occurs. Those already receiving a pension are fully protected, while those still at work could find their retirement benefits greatly reduced. When Waterford Crystal went bankrupt and its pension scheme collapsed in 2009, its employees were left with between 18 and 28 per cent of their anticipated retirement benefits. This debacle provides the most graphic example of the weakness of Irish pension law, the lack of protection for the pension benefits of workers in such schemes.

A recent ruling by the European Court of Justice found in favour of the Waterford Crystal workers and against the Government for its failure to protect workers’ pension contributions. This judgment now requires the Government to provide a pension protection scheme, which could cost an estimated €300 million.

But, instead of using the Social Welfare and Pensions Bill to alter the priority order of entitlement on wind-up and so achieve a better and fairer balance between retirees and pension holders, the Government has, inexplicably, deferred that decision. As a result many workers now continue to be exposed to financial risk, at least until the Government changes the priority order of entitlement in a scheme wind-up to achieve greater equity between retirees and pension members.