The Code of Practice for the Governance of State Bodies, as amended by Department of Public Expenditure, NDP Delivery and Reform Circular 16/2021, sets out the process that must be followed when commercial semi state bodies (CSSB) request Ministerial approval for pension increases. The Code of Practice requires that any request for a pension increase by a CSSB must first be submitted to the parent Minister, along with NewERA advice. The scheme rules will also typically reference the requirement for Ministerial approval of pension increases. Should the parent Minister approve the increase request, my consent is then sought by the parent Department.
Under the Pensions Act, 1990 it is a requirement that defined benefit occupational pension schemes meet the minimum funding standard, which entails the scheme maintaining sufficient funds to pay members their pension entitlements were the fund to be wound up. Should a scheme not reach the minimum funding standard a funding proposal from the pension scheme trustees is required under the Act to address the deficit. This funding proposal can include increase employer and employee contributions and benefit reductions to members’ past service. It is therefore important that any pension increase is carefully managed to ensure that an increase does not adversely impact pensioners, deferred members, current employees or the capacity for the CSSB to provide for pension increases in the future. A pension increase proposal would be rejected if the scheme does not meet the minimum funding standard.
A decision to approve a request to increase pensions is therefore informed by actuarial analysis demonstrating that the pension fund is in a sufficiently strong financial position to bear the cost of the increase proposed, including meeting the minimum funding standard. NewERA prepares a report on each consent request including analysis of these and any other relevant factors, such as the risk profile of the Fund.
There is one request for a pension increase that has been received by my Department that is currently awaiting my consent. My Department would not hold information on outstanding pension increases that have not yet been submitted to my Department. The average time in 2023 between my Department receiving a request and my approval of the request was less than 2 weeks. Given the rigorous governance framework in place to ensure that pension increases are justified in strategic, policy and financial terms prior to approval, there are a number of necessary steps that must be followed. My Department will continue to expedite pension increase consent requests and prioritise them in our engagement with other stakeholders.
