Irish Plan Sponsors Urged to Ensure Employees Can Make Informed Choice on AVCs
04 September 2012 (PLANSPONSOREurope.com) –Irish plan sponsors
need to offer employees independent advice over whether they should gain early
access to additional voluntary contribution (AVC) funds, according to IBEC.
The Irish employers’ group has published a new report which claims
allowing individuals to access AVC s could result in an immediate Exchequer
windfall of €600m, rising to €1.24bn as a result of additional spending in the Irish
The group, which says such a move would provide a domestic
economic stimulus worth €1.8bn, has called on government to follow the example
set by Denmark and Iceland to change pension rules to facilitate the draw-down.
IBEC chief economist Fergal O'Brien told PLANSPONSOR Europe: “Advisers are going to have full access and details
of how the main occupational scheme is performing and whether that scheme is
going to be in deficit.
“They will know whether there are problems with the defined
benefit scheme and whether defined contributions haven’t been sufficient and if
members actually need these additional contributions
“This is exactly the type of advice that employers are
facilitating at the moment where advisers are looking at the adequacy of the
main occupational scheme.”
director of policy, at the Irish Association
of Pension Funds (IAPF) said he saw
some merit in
IBEC’s proposals as limiting such measures to AVCs does has the benefit of not
undermining basic retirement provision.
But he warned some
issues would need to be thought through carefully such as whether access should
be limited and whether there would be pressure from creditors to force access.
He added: “While
boosting the economy could be one objective it would also be attractive to
people who have immediate debts. The need to take independent financial advice
would be important.”