Employers criticised for 'theft' of pension payments

The Pensions Ombudsman yesterday criticised the "theft" by employers of pension contributions deducted from employees but not remitted to pension schemes, particularly in the construction sector.

Last year, complaints about the non-remittance of deductions constituted 16 per cent of complaints received by the ombudsman, up from 6 per cent the previous year. At the launch of his report for 2005, Paul Kenny said the Construction Federation Operatives' Pension scheme remained one of his "best customers".

"There is still a depressing number of complaints about the failure of employers to register members or to pay contributions, and worst of all, the theft by employers of contributions that have been deducted and not remitted to the pension scheme."

Mr Kenny said it was impossible to quantify the scale of the problem that, he said, was mainly confined to smaller companies. Although he knew of no cases where the alleged "theft" of deductions had been referred to the Garda, he said he had referred cases to the Office of the Director of Corporate Enforcement.

He said under pensions legislation, directors and officers of a company could be pursued in cases where an offence was committed by the body corporate with their knowledge. "I would like to see a number of those bodies hanging at the crossroads," he said.

He said his annoyance at some of the cases that came to the attention of his office in 2005 might lead him to review his policy of not identifying employers who were the subject of complaints.

He also referred to a case he described as being "shady, barely legal" but not morally correct. The case involved the transfer of money from one fund to another, within the same employer, and the taking by the employer of a €1 million surplus that existed in the closed fund (see panel).

Mr Kenny said his office was dealing with an increasing number of foreign nationals and expected the numbers to grow.

He also said it was "high time" that the issue of firms claiming to be employment agencies so they could avoid their responsibilities to workers was dealt with. "That issue needs to be addressed by the Department of Enterprise, Trade and Employment."

Mr Kenny also criticised the stance taken by the Department of Finance with public servants who wished to reverse an earlier decision not to have a public pension. He said that the department's policy of refusing such requests was in conflict with the desire of Séamus Brennan, the Minister for Social and Family Affairs, to see as many people as possible with pension coverage.

Mr Brennan, attending the publication of the report, said Mr Kenny's office played an important role in creating confidence in pension schemes. During 2005, the office opened 389 files and closed 385. The office made 76 determinations, of which 24 upheld complaints. A further 146 cases were settled through mediation, with 95 of these ending in some concession to the complainant. Overall, 53 per cent of cases resulted in some award to the complainant.