Brian Hayes MEP today said that EIOPA’s (European Insurance and Occupational Pensions Authority) stress test results on pension funds which show that Irish occupational pension funds have recorded significant deficits is an important warning sign.
“EIOPA’s stress test results are an important warning sign that our pension funds have come through significant financial stress. Clearly, Ireland has gone through a tough bailout and in many cases, pension funds do not have sufficient assets to meet all liabilities. The current low-interest rate environment is creating strain on many pension funds also.
“The stress tests present important information. It shows that we need to ensure that the right tools are in place to support members and beneficiaries during a financial crisis. The EU’s Occupational Pension Funds Directive is currently being negotiated and in that we are trying to improve important provisions for pension funds such as investment rules, funding requirements and governance procedures.
“Pension funds are very much part of the long-term financing of the Irish and European economy. We need to recognise that it is the long-term nature of pension funds that allows them to run temporary deficits. But the lesson for these stress tests is that proper mechanisms need to be there for pension funds to run such deficits, while also ensuring that pensioners continue to be paid out and that there is sustainability into the long-term.
“In Ireland the old-age dependency ratio is projected to double between now and 2050. Obviously providing for this age cohort in terms of solid pension schemes is crucial.”