New Irish insolvency rules to allow €899 monthly spend for debtors
SINGLE ADULT WILL BE PERMITTED €247 FOR FOOD AND AND €35.73 FOR CLOTHES PER MONTH
Minimum income guidelines for people entering the State’s new insolvency process have not been set in stone or at “subsistence level living or anywhere close to that”, the head of the agency overseeing the process has said.
Lorcan O’Connor of the Insolvency Service of Ireland (ISI) said the new guidelines would be flexible and would not see people’s finances being “micro-managed” by banks or new Personal Insolvency Practitioners (PIPS).
However, he admitted many people would be forced to give up private health insurance, cars and holidays.
The guidelines on a “reasonable standard of living” for insolvent debtors and “reasonable living expenses” are central to the insolvency regime as they set out how much money people will be allowed to spend within any deal agreed with their creditors.
It includes expenditure limits on items such as food and basic medicine.
Under the guidelines a single adult with no car will be permitted expenditure of €898.96 in set cost over and above any mortgage or rent payments. The set costs will rise to €1,030 if that adult has a a car. They will be given €126 a month – or €29 a week to cover social inclusion. An allowance of €204.88 is to made for each child of primary school-going age.
Minister for Justice Alan Shatter unveiled details of the new insolvency process this afternoon in Government Buildingsand the insolvency service has also launched an information campaign. This includes guides to debt settlements along with a websiteand an information helpline for queries.
Mr O’Connor told The Irish Times childcare costs would come under the microscope but he denied people would be forced to give up work if their earnings were less than the cost of childcare.
He said PIPs would have to “ensure that the child care costs are reasonable” but expressed the view that “it would be completely counter intuitive to ask anyone to give up a job.
“It makes sense for people to remain in their jobs and while there may be some people who have childcare costs in excess of their income there may be reasons for this.”
He said some guidelines, including those referring to childcare costs, had been redrafted in recent weeks to make it clearer that people would not be forced to give up work.
He said the redraft was needed because he felt the flexibility “which is so enshrined” in the ISI’s intentions had not been sufficiently outlined in early drafts. While the wording of the guidelines had changed in recent weeks, he said the numbers had not, Mr O’Connor said.
The ISI has relied heavily on work carried out by the Vincentian Partnership for Social Justice on income guidelines and have been “sense-checked” with both the CSO and the Central Bank as well as the personal insolvency service in the UK counterparts.
Mr O’Connor said the Vincentian Partnership study had been done “in a very scientific way” and its figures were “based on needs rather than wants. I certainly wouldn’t describe the Vincentians as being pro-bank”.
A million of us face paying 15% of wages into pensions
OECD recommends no opt-out in Contributions should double
Up to one million workers with no pension face the prospect of being forced to take one out for the first time.
The Irish Independent has also learned a key report recommends that the contributions for these pensions should be double the original plan.
Workers, employers and the State should contribute 15% of salary to the new scheme, it says.
The report commissioned by Social Protection Minister Joan Burton recommends that most of the one million workers with no pensions should be signed up for a private scheme and given no option to leave it. The study — from Paris-based international think-tank, the Organisation for Economic Co-operation and Development (OECD) — says the most “effective and least costly” way to deal with the mounting pensions crisis is to force cash-strapped workers to put aside some of their wages to fund their retirement.
At present, six out of every 10 private-sector staff have no work-based pension — and rely on the state- contributory pension when they retire.
With the number of pensioners set to explode over the next three decades, the taxpayer can no longer afford to keep state pensions at the current level.
This means workers will have to boost their own pensions at a time when they can least afford to do it.
The move will be seen as a tax on middle-income workers who cannot afford to put their own pension arrangements in place.
And employers are likely to baulk at having to stump up money to provide pensions for staff, particularly smaller firms.
OECD officials were commissioned by the Government to tell them how to tackle the country’s pensions time-bomb.
Although the Government has yet to make a formal decision on the timeframe and structure for the new scheme, it will be difficult for it to go against the advice of the prestigious think-tank.
The report states that compulsory private pensions are “the least costly and the most effective approach to increasing private-pension coverage”.
Ms Burton is known to be in favour of some form of private pensions arrangements for the more than half of the workforce who will only have the state pension when they retire.
She has spoken of a system where those who have no private pension are automatically enrolled in one, but can then choose to opt out.
Up to now, the expectation was that contribution levels would be around 8pc, with workers, the State and employers all making contributions.
ENROLLED
However, the OECD is set to recommend that middle-income people over the age of 22, without a private pension, should be automatically enrolled and given no opportunity to opt out.
It says lower-paid people will not have to take up the scheme as they will already qualify for the state contributory pension and the level of their earnings means they would not gain much from having an additional private pension.
Not allowing middle-income earners to opt out is likely to be hugely controversial as many of those in middle-income jobs in the private sector are already struggling to make ends meet.
The OECD is recommending that the level of contributions into the new auto-enrolment system should be double what had previously been outlined in government proposals.
The state pension, which is around ¿230 a week for those who have paid sufficient pay-related social insurance (PRSI), is not seen as adequate for a comfortable retirement. Most workers pay 4pc in PRSI.
There is also concern that just one-eighth of the population is aged over 65 at the moment, but up to a quarter of the population will be over that age by 2050.
The Irish auto-enrolment scheme had been due to come in next year. At Christmas, Ms Burton said she was pressing ahead with the plan, but stressed that it would not be introduced until the economy improves.
She said recently that auto-enrolment would be particularly beneficial for people on low and middle incomes. It would also help those moving in and out of different jobs, who had very little opportunity to save for a traditional pension with their employer.
“With an auto-enrolment scheme, they would be paying a fixed amount relative to their income and the Government would also contribute to that,” she said.
“That would mean that by the time they retire, they could look forward to a decent level of pension — the contributory social welfare-based retirement pension but also an additional amount of savings, which would give them a bigger income in their retirement.”
The State first launched a plan for an auto-enrolment pensions as part of the National Pensions Framework in 2010.
The OECD also recommends that workers in defined-benefit schemes should get more of the assets when the plans are wound up. At the moment, pensioners have first call.
OECD official Paulo Antolin consulted widely with people with an interest in pensions in drawing up the report, which will be launched on Monday by Ms Burton and the OECD.
A spokesman for Ms Burton’s office had no comment.
Minister for Jobs Richard Bruton, Enterprise and Innovation launches IDSA
The Minister for Jobs, Enterprise and Innovation, Richard Bruton TD, has formally launched the Irish Debt Securities Association (IDSA) at the Royal College of Physicians.
The IDSA is an industry organisation whose membership includes the corporate administrators, audit firms, legal advisors, listing agents, and other parties involved in the structuring and management of special purpose vehicles (SPVs) in the industry in Ireland.
Around €500 billion of SPV assets are already resident in Ireland, representing approximately 22% of all European SPV assets. The IDSA’s objective is to enhance the environment in Ireland for structured finance and debt securities and to promote the country as the leading jurisdiction for SPVs.
Introducing the association, the chairman of IDSA, and partner at Matheson, Turlough Galvin noted: “The IDSA was established to promote and develop Ireland as the premier European location for activities to support the global structured finance, debt securities and the specialist securities industries.”
Galvin went on the highlight that “the mission of the Association is to promote high standards of professional conduct among industry service providers and lead the industry activity to develop and provide a world-leading environment from Ireland for structured finance transactions and for the issuance of debt securities and other specialist securities”.
Welcoming the establishment of the IDSA, the Minister for Jobs, Enterprise and Innovation, Richard Bruton TD said: “International financial services forms a key part of the Government’s plans for jobs and growth, and through our Action Plan for Jobs we are targeting the creation of 10,000 additional jobs in this sector over the coming years. We are putting in place a range of measures to support expansion in this sector, including the establishment of a new team in IDA Ireland to target investment and jobs from this sector and exploiting opportunities offered by high growth sub-sectors such as green finance, Islamic finance, structured finance and post trade services. Today’s announcement is a major boost for the sector in Ireland, I commend all involved and wish them every success with this new venture”.
The chief executive of IDSA, Gary Palmer noted that for many reasons the traditional means of raising finance is being challenged and other sources of capital are needed. This is especially so in Europe with it reported, he said, “that there now exists a funding gap of many trillions of Euros and all of the discussion around this funding gap is concluding that this needs to be addressed in the non-bank financing areas of special purpose vehicles and securitised structures”.
Palmer added: “As an open, transparent and tightly legislated jurisdiction with a foundation of existing industry expertise, Ireland and our sector has the opportunity to provide the products and solutions that the international industry is seeking.”
Infant universe had a ‘star factory’
Light captured from when the universe was still in its childhood has shown a massive galaxy that churned out nearly 3000 stars per year, a rate 2000 greater than our own Milky Way today, astronomers say.
The galaxy, called HFLS3, has a mass of stars nearly 40 billion times the mass of the Sun.
Its light, snared by a network of 12 telescopes, was emitted around 12.8 billion years ago, less than 900 million years after the birth of the cosmos, according to their study, published in Nature.
‘This galaxy is proof that very intense bursts of star formation existed only 880 million years after the Big Bang,’ said Dominik Riechers of Cornell University in New York.
‘We’ve gotten a valuable look at a very important epoch in the development of the first galaxies.’
Separately, the European Southern Observatory (ESO) on Wednesday reported remarkable results from a brand-new telescope in the Chilean desert designed to pinpoint such ‘star factories’ in the early universe.
The instrument, the Atacama Large Millimetre/submillimetre Array (ALMA), uses a small forest of antennae to pick up light at relatively longer wavelengths, which penetrates dust that obscures star-forming galaxies.
ALMA was inaugurated only on March 13 but in the months before the ceremony, astronomers were able to put part of the network through its paces.
Even when incomplete, the telescope located more than 100 of the most fertile galaxies in early universe, ESO said.
‘ALMA is so powerful that, in just a few hours, it captured as many observations of these galaxies as have been made by all similar telescopes worldwide over a span of more than a decade,’ the observatory said in a media release.
The data is published in the Monthly Notices of Britain’s Royal Astronomical Society and the Astrophysical Journal.
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