Madam, – When commenting on the fact that up to 80 per cent of Irish pension schemes are in deficit, pension regulator Brendan Kennedy said, “What determines whether a pension scheme can meet its obligations is not regulation but the prudent management of that scheme by the trustees and the support of the sponsoring employer on an ongoing basis” (Business, February 10th).
Mr Kennedy thereby implies that the trustees of 80 per cent of schemes have not been prudent or that Irish employers have been lacking in a will to support or save their schemes.
In most of the cases of which I am aware, employers, workers and pension trustees have supported their schemes and operated the schemes prudently. The benefit structure, the investment policies and the contribution rates were determined by the best and most expensive advice money could buy.
It is not good enough for the regulator to avoid any responsibility for the mess that is Irish pensions by blaming the trustees, or, for that matter, employers. Where was the regulator when for more than a decade before the crisis Irish pensions were overly exposed to international equity markets? Where was the regulator when Revenue rules forced well run schemes to jettison their surpluses so that when the downturn came the schemes quickly descended into deficit? In those years the regulator added cost to schemes, such as introducing the obligation on schemes to revalue the pension of deferred members.
Now is a time of great crisis for the workers in funded pension schemes. They have paid massive contributions over the years and stand to lose the pensions they have worked so hard for. Rather than blaming trustees and employers Mr Kennedy should be working with them to help salvage something from the mess which, after all, happened on the regulator’s watch.
For five years the Irish Congress of Trade Unions has been lobbying Government with reasonable and creative suggestions to try to avert the crisis that is now upon us. We were not listened to, but found that the senior civil servants whose own pensions are safe were often blissfully unconcerned about the plight of our members and their families.
For more than two decades the so-called experts all shared a set of assumptions which proved false. Simply put, the most fundamental assumption was that in the long term equities will always beat inflation. The regulator has now apparently adopted a new orthodoxy that is that bonds are risk-free and in every circumstance a better option than equities. As Oliver Cromwell once said to the parliament of England, “I beseech you, in the bowels of Christ, think it possible you may be mistaken”. – Yours, etc,