Speech by the Taoiseach, Mr. Brian Cowen, T.D., at the presentation of the European Pension Funds Awards on Wednesday, 18th November, 2009, in the RDS.
Tá áthas orm a bheith anseo an tráthnóna seo ar chuireadh ón irisleabhar "Investment and Pensions Europe" chun na Gradaim Chistí Pinsean Eorpacha do 2009 a chur i láthair. Is é seo an teacht le chéile is mó de chistí pinsean san Eoraip agus tá a fhios agam gur roghnaíodh na buaiteoirí gradaim tar éis phróiseas moltóireachta dian. Táim ag súil go mór castáil leis na buaiteoirí deiridh agus aitheantas a thabhairt don méid atá bainte amach acu maidir leis an ngradam mór le rá seo a bhuachaint.
I am delighted to be here this evening, at the invitation of Investment and Pensions Europe (IPE) magazine, to present its European Pension Funds Awards for 2009. This is the biggest coming together of pension funds in Europe. I know that the award winners have been selected following a rigorous judging process; and I look forward to meeting them and acknowledging their achievement.
I would like, at the outset, to congratulate IPE on 12 years of success as a leading commentator on the development of pension funds in Europe. I also want to acknowledge the contribution of Fennell Betson, the founding editor of IPE. Fennell started his professional career in Dublin as an insurance broker and is a Chartered Insurer with a degree in economics from National University of Ireland. So, Ireland can claim IPE as a national success story!
Government Action on Pensions in Ireland
Governments all over Europe have been devoting increasing time and attention to pensions issues and Ireland is no exception. In response to the market upheavals over the past year or so, the Irish Government has taken a series of steps aimed at supporting the Irish pension system and defined benefit schemes in particular.
As examples:
We have allowed pension scheme trustees greater flexibility and time to recover funding positions, to reduce the pressure on under-funded schemes;
We have introduced a Pensions Insolvency Payment Scheme (PIPS) as an alternative to annuity purchase for trustees of DB schemes in deficit, where the sponsoring employer is also insolvent;
We have re-ordered the wind-up priorities, so that more funds are available for active and deferred members, and we have provided greater flexibility for schemes to restructure in the event of under-funding; and
We have also strengthened the regulatory role of the Pensions Board.
While these are short and medium term actions, we also have to look at the issue of long-term pension reform, given the demographic and sustainability challenges facing our pension system in future years. In the current environment, we are of course very conscious that any measures we take must not erode competitiveness or create unsustainable pressures on individuals or business.
Cross- Border Pension Activity
Here in Ireland, we have also been focusing our attention on the significant potential for cross - border pension activity. In my own Department, an IFSC Pension Funds Working Group has been established to identify opportunities for our country to become a prime location for the centralised management of pension funds.
Ireland is ideally placed to provide the skills, expertise and knowledge required to attract multinational companies wishing to centralise their pension management activities. The Irish pensions industry is well established, with service capabilities across the pensions sector in areas such as actuarial, accounting, legal, administration and fund management. Ireland has also established leadership in the area of asset pooling for pension funds, with the successful development of the Common Contractual Fund.
Our profile and reputation for cross-border financial services is one of our key strengths. We are determined to build on the successful development of the Banking, Insurance and Funds industries in the International Financial Services Centre and to use our strengths to create another centre of excellence in the management of European pension funds.
Financial Crisis
The recent financial crisis has caused a lot of worry for everyone, particularly our elderly people. Many pensioners around the country have been prudent in investing in pension funds in order to provide for themselves in their retirement years. I am saddened that those people who have been prudent and have been conscious of their obligations to themselves and their families in making such pensions provision, have had their investments greatly depleted as a result of the recent financial markets collapse.
Now in the context of the collapse of the financial markets and share values, those people who looked to the banks as the safest return on their investment have seen their faith in that system shattered. Once regarded as blue chip shares, they have now seen the value of shares in financial institutions virtually wiped out in a very short time. In recent years, many banks aggressively sought a return for their shareholders in the international financial market place but, in doing so, they moved away from a more traditional and prudential business model that would have avoided excessive gain but provided the security of a safe investment. It has now deprived many such small investors of providing a better living for themselves and perhaps leaving a financial legacy for their children.
Banks and financial institutions need to understand, that because we can't have a functioning economy without a functioning financial system, the taxpayer has stepped in and has provided the banks with the capital they will need in the short-term in order to continue operating with adequate capital ratios. We are doing all of this, not because the government is beholden to banks or bankers, but because we want to maintain the system where ordinary businesses and individuals can conduct their day to day business activities and where access to credit from banks provides the means for the thousands of businesses, and tens of thousands of people who work in them, to continue in business and to reshape their enterprises. That is the only way we can regain the standard of living which we enjoyed as a nation in recent years before the downturn.
In order to maintain jobs and investment, the sooner we see the banks get back to the business of banking, the sooner the recovery will happen and the sooner the taxpayers get a return on their investment in those banks.
Banks need to accept that they have wider societal responsibilities and obligations now that the taxpayer has helped them survive.
They need to remember that they are in a new situation now.
Consequently they need to demonstrate that they are extremely mindful of the fact that without the intervention of the State in providing the resources they required, the prospects of their recovery, and consequently, the recovery of the wider economy, and maintaining jobs would be remote.
This Government is determined to restore the reputation of our banking system. We will now put in place a new regulatory regime in relation to banking. And through our assistance to the financial sector, we have imposed new obligations on the banks. We have also appointed directors to all of the guaranteed banking institutions.
We should also be mindful that there is a large amount of people who don't have a lot of disposable income to participate in saving schemes or in pension investments and, therefore, rely solely on the state pension.
It is my intention in dealing with the budgetary crisis to ensure that those people will not be adversely affected by the decisions we have to make.
Budgets are not simply about balancing books - as important as that is. They are also about acknowledging what we all see as important in society.
I am proud of the provision we made for pensioners during the good years. It is not my objective to undo all of that good work now.
The Government is clear about what needs to be done and focused on getting on with the business at hand. Creating a climate that will facilitate investment and instil confidence in the direction of the country must now take priority for us. Corrective action taken now on the public finances is another necessary step on the road to recovery. We will do it because we must.
ENDS.