The Minister for Finance, Brian Lenihan has today signed a statutory instrument to give effect to the Pensions Insolvency Payment Scheme 2010 (PIPS) from 1 February 2010. The purpose of the new scheme is to give a better return to those pension funds in deficit where the employer has also become insolvent. This is intended to safeguard the entitlements of existing pensioners and lessen the blow for those yet to retire. It is aimed at pension scheme members who have no other recourse to funding because their employer is insolvent and their scheme is in deficit.

  

The PIPS scheme works by the Government, through the National Treasury Management Agency, making available an investment facility that links the return on the pension fund's investment to the ten year rate on fully secured Government bonds. Under PIPS, the scheme trustees can pay a sum to the Exchequer to recover the cost of paying the pensions of retired members instead of buying annuities. Savings will then be put towards the pensions of those yet to retire, thereby reducing, to some extent, pension shortfalls. PIPS is intended to be cost neutral. PIPS is being operated by the Department of Finance and involves a two stage application procedure involving certification by the Pensions Board and then the Minister for Finance.  It will operate on a pilot basis for three years.