The National Asset Management Agency is pursuing the multimillion-euro pension funds of property developers by seeking a claim over their retirement nest eggs in an attempt to force them to reduce their debts to the State agency.
As part of negotiations to approve the business plans of the biggest developers, Nama has demanded that they agree to it taking a charge over their pensions and any payments made from their pensions.
The pursuit is the latest in a series of tactics which the agency is using to force developers to co-operate to reduce their debts.
Earlier this year, Nama – set up by the Government to take the most toxic loans out of the banks – recovered €200,000 worth of jewellery and has also forced developers to sell jets and helicopters and take big salary cuts.
“It is quite common for us to seek to place a charge over a debtor’s pension to reduce the amount of money owing to the taxpayer,” said a Nama spokesman.
The power to demand a call on pensions is seen as an attempt by Nama to seize large cash amounts as well as to compel developers to sign up to business plans showing how they will sell assets to reduce debts.
Unlike in Britain, Nama can seize control of pensions if a developer is declared bankrupt in the Irish courts – a point the agency has raised in talks with the borrowers.
Pensions are among a range of personal assets held by the developers over which the agency is seeking to have a say.
Nama has sought charges over developers’ family homes to ensure their co-operation in the sale of assets and the reduction of their debts. The agency agrees to maintain the charge on the family home for 12 months after the last of their assets have been sold.
Many developers hold valuable pension pots, having built up substantial retirement funds.
Significant sums of money were moved to pension funds ahead a €5 million cap on tax relief for contributions which was introduced in the 2006 Finance Act by the then minister for finance Brian Cowen.
Agreement over the future of their pensions must be signed by developers if they are to avoid enforcement action by Nama that would lead to the loss of their businesses to statutory receivers.
The State agency aims to approve the business plans of the 180 most-heavily indebted borrowers who account for €61 billion of the face value debt at Nama.
In cases where plans are approved, the agency will work with developers on salaries of between €75,000 and €100,000 a year, although in some controversial cases pay of up to €200,000 a year has been agreed.
By the start of last month, Nama had agreed to work with developers in 50 of the top 113 cases, while talks were ongoing on business plans in a further 33 cases.
The agency had taken enforcement action in 30 cases, seizing property assets or control of companies by appointing receivers.
Created to purge the banks of land and development loans – the riskiest on their books – Nama has taken over loans with an original value of €72.3 billion at a 58 per cent discount of €30.5 billion.
A further €1.9 billion of loans will be acquired shortly, bringing the agency’s loan portfolio to more than €74 billion, making it the world’s largest property fund.
The purchase of the loans crystallised heavy losses at the banks, forcing the State to inject capital and pushing most of the banking sector into public ownership.
Nama does not expect to recover more than €31.5 billion – the value of property assets supporting its loans – from developers, agency chief executive Brendan McDonagh has said.
Last week Nama sold €800 million of debt linked to loans acquired from Anglo Irish Bank and Bank of Ireland on Claridge’s, Connaught and Berkeley hotels in London.
The agency must reduce its debt by 25 per cent or €7.5 billion by 2013 under its own business plan.
