THE DEPARTMENT of Finance is "sympathetic" towards changing pension rules to allow persons nearing retirement age to defer the purchase of an annuity for two years, Minister for Social and Family Affairs Mary Hanafin told The Irish Timeslast night.
While they waited for the market to improve, these people would have the State pension to fall back on, she added.
At present members of defined contribution pension schemes are obliged to buy an annuity when they retire, regardless of the state of the stock market.
The Minister said when funds say they cannot meet their obligations they are given a period of time, now extended to 18 months, to set out proposals for restructuring over a three-year, or in certain circumstances, 10-year time-span.
"Younger people have plenty of years to make up the fund and the markets will turn around - they can come back," she said. It was different for people "who are about to retire soon who have been paying defined contributions and now find they have to purchase their annuity".
She said the Department of Finance was "sympathetic to deferring it for two years". However, those who chose that path "would be taking a risk, obviously".
Asked what would be the source of income for pensioners who deferred the annuity for two years, she replied: "Most of these people would have a State pension and the State pension is a good guarantee to fall back on."
Commenting on a further report yesterday that pension funds had fallen in value, she said: "The markets have gone down and the pension funds are, after all, market funds."
She added: "We have no definite information that any specific pension funds are in difficulty, but obviously they are dependent on the market.
"This time last year 80 per cent of Irish funds indicated they had sufficient money to meet the requirements of pensioners if their companies went bust. We do expect funds to be in difficulty this year because of the markets."
Ms Hanafin also said there was a Government-level investigation into the leak of a memo she presented to Cabinet last week on the current difficulties in the pension sector.
She expected the disclosure of the document would come up at today's Cabinet meeting. There was an "in-house investigation" under way to ascertain the source of the leak to a Sunday newspaper.
The scope of the investigation extended beyond her own department. "There's an investigation at Government level. They check to see who had access."
Earlier this year, the Irish Association of Pension Funds called on the Department of Finance to allow members of defined contribution pension schemes to defer the purchase of their annuity until markets recovered.
However, it is understood from other sources that an early decision from the department may be unlikely, given its current involvement with issues related to the future of the banking sector in Ireland.
